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63d  Congress,  )  HOUSE  OF  REPKESENTATIVES.  J  Document 

3d  Session.        j  (   No.  1271. 


PRICES  OF  WHEAT  TO  PRODUCERS  IN  KANSAS,  ETC. 


'  j!q[p«oY^  „;,<i^  FROM 

THE  SECRETARY  OF  AGRICULTURE, 

TRANSMITTING 

REPORT  CONCERNING  THE  PRICES  PAID  FOR  WHEAT  TO  THE  PRO- 
DUCERS IN  THE  STATE  OF  KANSAS,  AND  THE  PRICES  AT  WHICH 
SAID  WHEAT  IS  SOLD  FOR  EXPORT  AT  KANSAS  CITY,  MO.,  AND 
HOW  SUCH  PRICES  ARE  DETERMINED. 


December  9,  1914. — Referred  to  the  Committee  on  Agriculture  and  ordered  to  be 
printed,  with  illustrations. 


Department  of  Agriculture, 

Washington,  October  24,  1914. 
The  Speaker  of  the  House  of  Representatives. 

Sir:  Complying  with  House  resolution  No.  571,  directing  the  Secre- 
tary of  Agriculture  to  communicate  to  the  House  of  Representatives 
a  report  concerning  the  prices  paid  for  wheat  to  the  producer  in  the 
State  of  Kansas,  and  the  prices  at  which  said  wheat  is  sold  for  export 
at  Kansas  City,  Mo.,  and  now  such  prices  are  fixed  and  determined,  I 
have  the  honor  to  transmit  herewith  the  rej)ort  on  this  subject. 

The  report  contains  a  review  of  such  facts  as  the  investigators  of 
the  Office  of  Markets  and  Rural  Organization  have  been  able  to 
gather  since  the  passage  of  the  resolution  and  is  not  as  com[)lete 
as  it  might  have  been  possible  to  make  it  by  more  extended  investi- 
gation. 

Respectfully, 

D.  F.  Houston,  Secretary. 


451641 


2  prices  of  wheat  to  producers  in  kansas,  etc. 

Report  on  the  Marketing  of  Kansas  Wheat  in  1914. 

iBy  W.  H.  Kerr  and  L.  D.  H.  Weld,  OflBce  of  Markets  and  Rural  Organization;  Charles  J.  Brakd, 
Chief,  United  States  Department  of  Agriculture.] 

INTRODUCTION. 

One  of  the  most  noticeable  and  important  features  of  the  wheat- 
marketing  situation  in  Kansas  is  the  great  variety  of  markets  open 
to  wheat  producers.  Although  the  variety  of  outlets  is  a  great 
benefit  to  the  wheat  farmer,  it  also  results  in  a  vastly  complex  and 
intricate  system  of  marketing.  Roughly  stated,  the  principal  out- 
lets for  Kansas  wheat  are  as  follows: 

1.  Local  flour  mills. 

2.  Flour  mills  and  terminal  elevators  in  Kansas  City,  Mo. 

3.  The  foreign  market,  principally  via  Gulf  ports. 

4.  Other  domestic  markets,  such  as  Chicago,  Minneapolis,  and  eastern  cities. 

In  addition  to  these  markets,  Kansas  wheat  is  also  shipped  in 
large  quantities  to  flour  mills  in  the  Southern  States,  including 
Texas,  and  to  Western  States.  Some  of  the  principal  features  of 
the  various  markets  are  discussed  below. 

KANSAS   MILLS. 

In  a  year  of  normal  production  the  flour  mills  of  Kansas  furnish 
the  most  important  single  outlet  for  Kansas  wheat.  The  wheat 
production  of  this  State  for  each  year  since  1908  was  as  follows:^ 

Bushels. 

1908 78, 182,  000 

1909 76, 907,  000 

1910 62,480,000 

1911 51,030,000 

1912 91, 450,  000 

1913 86,515,000 

1914  2 164,  000,  000 

The  following  table  shows  the  number  of  flour  mills  in  Kansas  and 
their  output  in  1913:^ 


Daily  capacity  per  mill  (barrels). 

Number 
of  mills. 

Total 

daUy 

capacity. 

Flour 
made  in 

1913 
(barrels). 

Wheat 
ground  in 

1913 
(bushels). 

i,000  or  over .' 

16 
28 
60 
51 
36 

19,100 
16,570 
17,090 
6,165 
2,215 

3,171,225 

2,854,661 

2, 743, 121 

516,397 

155,517 

14,263,965 

500  to  1,000 

12,956,597 

200  to  500 

12,481,416 

100  to  200 

2,318,188 

Less  than  100 

716,338 

Total...              

191 

61, 140 

9,440,921 

42,736,504 

From  the  foregoing  tables  it  will  be  seen  that  the  flour  mills  of 
Kansas  in  1913  consumed  nearly  half  as  much  wheat  as  was  produced 
in  the  State  that  year,  and  that  if  run  at  full  capacity  they  could 


1  Kansas  City  Board  of  Trade,  Annual  Report. 
*  Department  of  Agriculture  estimate. 
3  Miller's  Almanac. 


PRICES  OF   WHEAT   TO   PRODUCEES  IN    KANSAS,  ETC.  3       H^'^^*''^ 

consume  a  much  greater  amount.  The  smaller  the  Kansas  crop  the 
more  imjDortant  are  the  local  mills  as  an  outlet  for  wheat.  Wlien 
the  crop  is  unusually  large,  as  in  1914,  the  other  outlets  for  wheat 
become  relatively  more  important. 

KANSAS    CITY,    MO.,    AS    A    MARKET    FOR    KANSAS    WHEAT. 

Kansas  City,  Mo.,  is  the  most  important  terminal  market  for  Kansas 
wheat  growers.  This  market  also  receives  wheat  from  Oklahoma  and 
Nebraska.  The  total  receipts  of  wheat  in  1912  were  43,719,600 
bushels,  and  in  1913  they  were  33,870,000  bushels.^  The  receipts  for 
July,  August,  and  September,  1914,  were  33,000,000  bushels,  as  com- 
pared with  18,000,000  bushels  for  these  three  months  of  1913.  In 
1912  the  shipments  were  30,665,000  bushels,  or  70.1  per  cent  of  the 
total  receipts,  indicating  that  about  30  per  cent  was  retained  for 
local  consumption.  In  1913  over  36  per  cent  was  retained  for  local 
consumption.  Tiiere  are  eight  miUs  in  the  city,  with  an  aggregate 
capacity  of  11,600  barrels  a  day.^ 

A  large  part  of  the  wheat  that  is  collected  at  Kansas  City  finds  its 
way  direct  to  flour  millers  in  different  parts  of  the  country.  Some 
goes  to  dealers  and  shippers  in  other  large  markets,  and,  when  prices 
allow,  some  will  go  to  the  Gulf  for  export.  A  great  deal  is  placed  in 
large  terminal  elevators  where  it  is  held  for  distribution  throughout 
the  year.  The  mixing  of  wheat,  i.  e.,  the  blending  of  different 
grades  in  order  to  raise  the  grades  of  the  lower  quality  wheat,  is 
practiced  in  this  market  as  in  others,  this  being  done  in  the  large 
terminal  elevators.  About  60  per  cent  of  the  Kansas  City  receipts 
arrive  in  July,  August,  and  September. 

THE   EXPORT   MARKET. 

The  foreign  outlet  for  Kansas  wheat  varies  in  importance  from 
year  to  year  as  the  size  of  the  exportable  surplus  of  the  United  States 
varies.  When  the  surplus  is  large,  as  in  1914,  wheat  is  on  an  ''export 
basis,"  i.  e.,  it  is  the  foreign  demand  that  determines  the  price  of 
wheat  in  the  United  States.  Under  such  conditions,  the  price  of 
wheat  at  any  point  in  the  United  States  at  least  approximates  the 
price  at  Liverpool  minus  the  cost  of  transportation,  handling,  insur- 
ance, etc.,  from  such  a  point  to  Liverpool.  When  the  United  States 
crop  is  short,  the  domestic  demand  brings  about  a  higher  domestic 
price  than  one  based  on  the  Liverpool  price,  and  wheat  stays  within 
the  country  for  domestic  consumption. 

The  great  bulk  of  Kansas  wheat  that  is  exported  moves  by  way  of 
Gulf  ports,  and  much  of  it  never  passes  through  Kansas  City,  al- 
though handled  to  a  large  extent  by  Kansas  City  dealers.  It  is 
largely  a  matter  of  the  relation  between  freight  rates  and  prices  that 
determines  whether  Kansas  wheat  shall  pass  directly  to  Gulf  ports 
for  export,  or  to  Kansas  City  (or  other  principal  grain  markets)  for 
transmission  to  domestic  consumers.  During  some  years  the  bulk 
of  the  crop  from  all  parts  of  the  State  moves  through  Kansas  City 
and  other  large  grain  markets,  such  as  Omaha,  Chicago,  and  Minne- 


^ 


'  Annual  Statistical  Report,  Board  of  Trade  of  Kansas  City,  Mo.,  1913. 
2  Miller's  Almanac. 


4  PRICES  OF   WHEAT  TO   PRODUCERS  IN    KANSAS^  ETC. 

apolis.  Other  years  the  bulk  of  the  crop  moves  southward  to  the 
Gulf.  During  a  season  of  normal  or  fairly  lively  export  demand  the 
southern  half  of  the  State  (the  more  im])ortant  in  wheat  raising)  ships 
southward,  while  the  northern  half  ships  eastward  and  northward. 
For  many  points  it  is  often  immaterial  whether  grain  is  shipped  to 
Kansas  City  or  to  the  Gulf,  and  slight  price  fluctuations  from  day 
to  day  may  determine  in  which  direction  to  ship.  This  relation 
between  freight  rates  and  Kansas  City  and  Gulf  (often  called  export) 
prices  is  shown  in  the  following  table: 

Relative  freight  rates  per  bushel  from  12  Kansas  ■points  to  Kansas  City  and  to  Gulf  ports, 
together  with  prices  paid  on  July  1,  1914,  for  wheat  "to  arrive"  at  Kansas  City  and  at 
Gulf  ports,  and  net  prices  on  each  basis. 


Town. 


Freight  rate  per 
bushel  to — 


Kansas 
City. 


Gulf. 


Price  bid  "to  arrive" 
at— 


Kansas 
City. 


Gulf. 


Net  price  received 
by  country  shipper. 


Kansas 
City. 


Gulf. 


Phillipsburg 

Logan 

Orinnell 

Liberal 

Hutchinson . 
Ellsworth... 

Emporia 

Corwin 

Tangonoxie. 

Hanover 

Beloit 

Manning 


Cents. 
7.95 
7.95 
8.7 
8.7 
7.8 
7.8 
5.4 
8.1 
3.3 
6.0 
7.5 
8.7 


Cents. 
17.4 
19.05 
17.4 
16.8 
15.3 
15.6 
15.3 
15.3 
14.1 
17.1 
18.6 
16.5 


Cents. 


Cents. 
81.25 
81.25 
81.25 
81.25 
81.25 
81.25 
81.25 
81.25 
81.25 
81.25 
81.25 
81.25 


Cents. 
64.05 
64.05 
63.30 
63.30 
64.20 
64.20 
66.60 
63.90 
68.07 
66.00 
64.50 
63.30 


Cents. 
63.85 
62.20 
63.85 
64.45 
65.95 
65.65 
65.95 
65.95 
67.15 
64.15 
62.65 
64.73 


&WUP    PO%T.» 


Fig.  1. — Map  illustrating  movement  of  wheat  from  12  points  in  Kansas  to  Kansas  City  or 
Gulf  ports,  as  shown  in  preceding  table. 

In  explanation  of  this  table  it  should  be  stated  that  the  12  towns 
have  been  selected  as  representative  of  different  parts  of  the  State. 
The  first  two  columns  represent  freight  rates  to  Kansas  City  and  to 
Gulf  ports;  the  third  and  fourth  columns  represent  the  prices  offered 
on  a  single  date  by  grain  dealers  for  wheat  delivered  at  Kansas  City 


PRICES  OF   WHEAT   TO   PRODUCEES  IN    KANSAS,   ETC.  5 

and  the  Gulf;  the  last  two  columns  are  obtained  b}'  subtracting  the 
figures  in  the  first  column  from  those  in  the  fourth,  thereby  showing  the 
net  price  received  by  country  elevators  by  shipment  in  the  two  direc- 
tions. It  will  be  seen  that  in  six  instances  the  country  shipper  receives 
more  by  accepting  the  Kansas  City  price  and  shipping  to  that  city. 
These  six  points  are  all  in  northern  Kansas  or  near  Kansas  City. 
For  the  other  six  stations,  shipment  to  the  Gulf  is  more  remunerative. 
During  the  recent  embargo  on  wheat  to  Gulf  ports,  considerable 
wheat  was  shipped  for  export  via  the  Great  Lakes,  through  Duluth, 
Superior,  and  Chicago. 

OTHER    DOMESTIC    MARKETS. 

Kansas  wheat  growers  have  other  large  grain  markets  open  to  them 
aside  from  Kansas  City.  Much  is  shipped  direct  to  Omaha  and  to 
Chicago.  The  size  of  the  spring  wheat  crop  of  Minnesota  and  the 
Dakotas  affects  the  movement  of  Kansas  wheat.  \Mien  that  crop 
is  short,  the  Minneapolis  millers  demand  large  quantities  of  winter 
wheat,  and  some  is  shipped  direct  from  the  country  stations,  while 
some  is  handled  by  shippers  in  Kansas  City.  The  Kansas  wheat  that 
goes  to  markets  east  of  Chicago  is  usually  handled  by  shippers  or 
dealers  located  at  Chicago  or  Kansas  City.  Shippers  also  find  markets 
in  practically  all  parts  of  the  United  States,  except  perhaps  in  the 
Pacific  Northwest. 

MARKETING   AT    COUNTRY   POINTS. 

In  practically  every  town  or  village  situated  upon  a  railroad  where 
there  are  at  least  a  few  cars  of  grain  raised  there  will  be  one  or  more 
local  buyers  of  grain.  These  buyers  receive  the  grain  from  the  farmer 
as  he  hauls  it  in,  paying  the  local  market  price  on  the  day  delivered. 
This  price  is  based  upon  the  bids  and  market  quotations  received  by 
the  buyer. 

Country  buyers  work  on  a  margin  of  from  2 Mo  4  cents  per  bushel. 
Hence,  the  country  price  on  a  given  day  would  be  the  price  for  which 
the  buyer  can  sell  his  grain  "on  track"  at  the  elevator,  less  his 
margin.  For  example,  on  September  28,  an  elevator  which  allows 
a  margin  of  3  cents  per  bushel  on  all  wheat  purchased  received 
several  track  bids  averaging  90^  cents  per  bushel,  basis  No.  2  hard, 
which  is  the  contract  grade  in  Kansas.  The  quotation  to  farmers 
on  this  day  was  the  "  on  track"  price  quoted  the  elevator  less  its  margin 
of  3  cents,  or  in  this  case  making  the  price  to  the  farmer  86J  cents 

Eer  bushel.  When  the  local  buyer  does  his  shipping  on  a  commission 
asis  he  will  take  the  spot  price  at  Kansas  City,  subtract  the  freight 
and  other  charges  inciclent  to  selling  in  Kansas  City,  and  deduct  his 
margin.  If  the  market  quotation  at  Kansas  City  on  spots  is  97 
cents,  the  freight  to  Kansas  City  5  cents,  commission  and  other 
charges  IJ  cents,  and  the  elevator  margin  3  cents,  the  local  market 
price  would  be  97  cents  minus  9\  cents,  or  87f  cents. 

Where  there  are  several  local  buyers  in  a  community  there  occa- 
sionally may  be  some  competition  between  them  for  business.  But, 
as  a  general  rule,  the  prices  paid  the  farmer  will  not  vary  between 
the  different  buyers.     However,  in  towns  where  there  is  more  than 


6  PKICES  OF   WHEAT  TO   PRODUCERS  IN    KANSAS,  ETC. 

one  buyer  the  price  paid  by  the  buyers  occasionaJly  may  vary  a 
portion  of  a  cent,  owing  to  the  attitude  of  one  buyer.  If  he  thinks 
the  market  is  going  up  lie  may  be  incUned  to  raise  the  price  slightly 
to  secure  additional  business,  with  the  chance  of  making  the  added 
price  in  the  rise  of  the  market. 

In  several  towns  visited  where  there  were  from  one  to  four  buyers 
it  was  found  that  the  price  quoted  the  farmers  by  all  the  buyers  was 
the  same. 

It  is  customary  in  some  cases  for  buyers  in  near-by  towns  to  com- 
municate with  one  another  as  to  the  prices  they  are  paying  on  a  given 
day  for  grain.  In  defense  of  this  it  is  claimed  that  a  buyer  will  pay  as 
high  a  price  as  possible  to  the  farmer  consistent  with  the  market. 
But  if  his  neighbor  buyers  are  cutting  this  margin  and  paying  more, 
he  will  have  to  do  the  same  to  retain  liis  business.  This  condition  is 
especially  true  where  several  towns  are  within  a  radius  of  a  few  miles, 
so  the  farmer  can  haul  to  any  one  of  two  or  more  towns. 

PRICE    CARDS. 

Price  cards  (figs.  1  and  2,  pp.  7-9)  are  sent  out  daily  by  grain 
shippers  who  are  in  the  market  for  grain.  Each  local  buyer  will 
receive  in  the  morning's  mail  from  12  to  25  of  these  cards.  These  are 
generally  sent  out  from  the  nearest  office  of  the  shipping  companies. 
There  being  representatives  of  the  large  Kansas  City  and  Chicago 
grain  dealers  at  Wichita,  Topeka,  and  Hutchinson,  some  consignment 
houses  send  out  cards  giving  the  prices  on  the  Kansas  City  Board  of 
Trade  for  the  day  previous.  In  addition  to  these  bids  and  quota- 
tions, each  country  buyer  will  get  the  opening,  11.30,  and  closing 
prices  of  the  Kansas  City  and  Chicago  Boards  of  Trade  by  wire  or  tele- 

Ehone.     Thus,  with  the  card  bids  and  wire  quotations,  the  country 
uyer  is  in  close  touch  with  the  market. 

The  larger  grain  shipping  firms  keep  representatives  on  the  road 
who  visit  the  various  country  buyers,  buying  the  grain  outright  ''  on 
track"  or  soliciting  consignments. 

Prices  of  wheat  to  producers  in  Kansas,  on  or  about  dates  indicated,  according  to  reports  of 
county  correspondents  of  the  Bureau  of  Crop  Estimates. 

[Cents  per  bushel.] 


Sept.  1 
Aug.  1 
July!. 


Averages  for 
the  State. 


1914 


70 


1913 


By  divisions  of  the  State. 


1914 


Western.    Central.     Eastern 


Western.    Central.    Eastern, 


PRICES  OF  WHEAT  TO  PRODUCERS  IN   KANSAS,  ETC.  7 

[Examples  of  price  cards  sent  out  to  country  elevators  by  grain-shipping  firms  at  Kansas  City,  Wichita, 

and  Hutchinson.] 

Figure  1. 


September  22,  1914. 
Acceptance  to  reach  us  here  by  9.15  a.  m.,  next  business  day,  we  bid 
you  the  following  prices  for  grain  (apparent  errors  excepted): 

Grain. 

Track, 

your 

station. 

Delivered 

Kansas 

City. 

Delivered 
Galves- 
ton. 

Time 
ship- 
ment. 

Terms. 

Lower  grades  to  be 
applied  at  market 
difference  day  of 
inspection  or   as 
follows: 

Form  A. 
No.  2  hard  wheat... 
Do 

93 

Oct.    3, 
1914. 

No.  2  red  wheat 

No.  3  or  better  corn. 

No.  3  red  oats 

No.    3    or    better 
kaflr  corn. 

State  price  and  number  of  bushels  sold  when  telegraphing  acceptance. 
Sales  of  one  car  to  be  contents  of  car;  sales  of  more  than  one  car  to  be  on 
basis  of  1,000  bushels  per  car.     We  reserve  the  right,  at  our  option,  to  can- 
cel, extend  the  time,  or  buy  in  for  seller's  account   grain  not  shipped 
within  time  specified,  and  to  reject  amounts  in  excess  of  5,000  bushels 
each  kind  of  grain.     Shipper  pays  weighing  and  inspection.     Delivery  of 
grain  bought  on  this  bid  not  perfected  until  sold  grain  reaches  destination 
specified  in  our  confirmation  and  has  been  inspected  and  weighed. 
Yours,  trulv.                                                                         

Consigmnents 

You  may  acc( 

accept  will  wirt 

solicite< 
;pt  this  I 
)  you  irm 

1. 

)id  after 
mediate] 

9.15  nex 

y- 

t  busines 

s  day,  and  if  we  can  not 

PRICES  OF   WHEAT  TO  PRODUCERS  IN    KANSAS,  ETC. 
Figure  2. 


September  22,  1914. 
We  bid  you  for  acceptance  to  reach  us  here  by  9.30  a.  m.  next  business  day 

for  account Should  our  card  reach  you  after 

9.30  a.  m.,  wire  your  acceptance,  and  if  no  material  change  in  market,  will  accept, 
otherwise  wire  your  counter  bid. 


Kind  of  grain. 

Delivered 

Galveston, 

Galveston 

terms. 

Delivered 
New  Or- 
leans or 

Westwego, 
New  Or- 
leans terms. 

Delivered 
Kansas 

City,  Kan- 
sas City 
terms. 

Days'  ship- 
ment. 

No.  2  hard  wheat 

No  2  hard  wheat 

109i 

109i 

30 

Lower  grades  will  be  applied  at  following  discounts,  except  that  we  reserve 
the  right  to  refuse  grain  grading  no  grade,  which  is  unfit  for  export. 

No.  3,  58  or  better,  1  cent  off;  57,  2  cents  off;  56,  3  cents  off. 

No.  4,  55  or  better,  4  cents  off;  54,  5  cents  off;  53,  6  cents  off ;  52,  7  cents  off . 

Rejected  wheat,  58-pound  or  better,  6  cents  off;  1  cent  additional  off  for  each 
pound  below  58- pound. 

No  grade  wheat  58-pound  or  better,  7  cents  off;  1  cent  additional  off  for  each 
pound  below  58-pound  if  merchantable. 

Galveston  corn  discounts. — No.  4  corn,  3  cents  per  bushel  discount;  No.  5  com, 
5  cents  per  bushel  discount;  no  grade  corn,  7  cents  per  bushel  discount. 

New  Orleans  corn  discounts. — No.  4  and  no  grade  corn  will  be  dried  for  seller's 
account  at  his  expense  and  shrinkage,  docked  according  to  quality  after  drying. 

Rejected  or  tmmerchantable  corn  will  not  be  accepted  on  this  contract. 

State  price  when  telegraphing  acceptance. 

We  reserve  the  right  to  reject  by  wire  amounts  in  excess  of  5,000  bushels. 
Acceptance  by  carload  to  be  confirmed  as  1,000  bushels  wheat  and  corn,  except 
single  cars.  Shipper  pays  weighing,  inspection,  trackage,  and  exchange,  if  any. 
Delivery  of  grain  bought  on  this  bid  not  perfected  until  grain  reaches  destination 
specified  in  our  confirmation  and  has  been  inspected  and  weighed.  We  reserve 
right  to  unload  cars  of  off  grade  grain  without  first  notifying  you.  On  contracts 
not  filled  at  maturity  we  reserve  the  right  to  cancel,  extend  time,  or  buy  in  for 
seller's  account.  Fractional  pounds  test  will  be  taken  at  even  pounds  under. 
It  is  understood  and  agreed  that  in  accepting  this  bid,  seller  is  to  leave  sufficient 
margin  on  drafts  to  guarantee  weights  and  grades — ^not  less,  however,  than  2  cents 
per  bushel.  All  grain  bought  subject  to  customs  and  rules  of  board  of  trade  at 
point . 


PKICES  OF   WHEAT   TO   PRODUCERS  IN    KANSAS,  ETC.  9 

(Copy  of  card  sent  to  country  elevators  in  Kansas  by  a  commission  firm  operating  in  Kansas  City,  Mo.] 


Kansas  City  Cash  Grain  Market,  September  14,  1914. 


Wheat. — Scarce  money  and  heavy 
receipts  at  all  primary  markets  account- 
able for  a  heavy  decline  in  wheat 
to-day,  with  both  the  cash  and  future 
wheat  opening  3  to  4  cents  down, 
closing  7  to  8  cents  down,  and  consid- 
erable wheat  that  arrived  late  unsold 
at  the  close. 

Receipts  to-day,  908  cars;  a  year  ago, 
134  cars. 

No.  2  hard:  l@1.01i,  l@1.01i, 
1@1.00^,  11@1.00,  1@99,  2@98i,  53@ 
98,  6@97i  17@97,  l@96i. 

No.  3  hard:  3@1.00,  l@99i  8@98, 
10@97i  48@97,  81@96^,  11@96,  32@ 
95i  19@95,  1@94,  7@93^,  7@93. 

No.  4  hard:  3@95,  15@-94,  7@93i 
20@93,  1@93  smutty,  5@92i,  13@92, 
l@91i  5@91  very  smutty. 

Sample  hard:  1@,97  cleaned  wts., 
1@91,  1@91  heating,  5@90  heating 
and  hot,  1@89  heating,  1@86  very 
smutty,  1@86  hot. 

No.  2  mixed:  1@97,  l@96i  58  lbs. 

No.  2  red:  8@1.01,  4@1.00^.  1@1.00, 
2@1.00  L.  S.,  1@1.00  58  lbs.,  13@99, 
3@99  58  lbs.,  3@98. 

No.  3  red:  2@1.00  7@98,  5@97, 
1@96,  1@96  some  oats,  1@96  55^  lbs. 

No.  4  red:  2@95  oats  mixed,  1@91 
oats  mixed. 

No.  2  durum:  95  to  96. 

No.  2  white  spring:  96  to  97. 

Com. — No  well-defined  markets. 
The  few  sales  show  about  1  cent  de- 
cline. Nearly  all  of  the  offerings  here 
are  unsold  and  without  bids  to-night. 


Receipts  to-day,  32  cars;  a  year  ago, 
68  cars. 

No.  2  white:  77  to  77^. 

No.  3  white:  l@76f 

No.  2  yellow:  1@75*. 

No.  3  yellow:  74^  to  75.  , 

No.  5  yellow:  1@71. 

No.  2  mixed:  1@75^  L.  S. 

No.  3  mixed:  74  to  74^. 

Oats. — The  few  samples  of  white  oats 
that  were  sold  show  3  to  4  cents  decline. 
No  bids  at  all  on  mixed  and  red  oats. 
A  number  of  cars  offered  on  the  mar- 
ket. Receipts  to-day,  61  cars;  a  year 
ago,  27  cars. 

No.  2  white:  45  to  45^. 

No.  3  white:  2@44^,  l®43i. 

No.  2  mixed:  Nom.  41  to  42. 

No.  3  mixed:  40  to  40^. 

Standard:  1@45. 

No.  2  red:  41  to  41^. 

No.  3  red:  40  to  40|. 

No.  2  rye:  88  to  89. 

No.  3  rye:  87  to  88. 

Feed  barley:  61  to  64. 

Bran:  2@96. 

FUTURE   CLOSING    MARKETS. 

September  wheat,  95,  off  7  cents. 
December  wheat,  97f ,  off  7f  cents. 
May  wheat,  1.04^,  off  8  cents. 
September  corn,  73^,  off  1  cent. 
December  corn,  67^,  off  2f  cents. 
May  corn,  71^,  off  2f  cents. 
September  oats,  45f ,  off  If  cents. 
May  oats,  46|,  off  3f  cents. 


These  cards  are  sent  out  a  few  hours  after  the  closing  of  the  market 
and  are  receired  on  the  morning  following  by  the  country  elevator. 

COUNTRY    BUYERS. 

There  are  four  general  classes  of  country  buyers^thc  local  flour 
mills,  farmers'  elevators,  line  elevators,  and  private  elevators.  In 
the  western  section  of  the  State,  where  there  are  no  elevators  at  some 
of  the  shipping  points,  grain  is  scooped  from  the  wagon  direct  to  th© 
car.  In  these  localities  there  A\dll  be  some  local  man  who  represents 
a  shipping  firm  located  at  one  of  the  larger  markets.  This  man  will 
buy  the  grain  from  tlie  farmers  and  bill  the  cars  to  the  shipping 
house's  order.  This  is  the  only  case  where  grain  does  not  pass  through 
a  buyer  who  has  no  elevator  facilities. 

There  are  1 ,0S0  ^  elevators  in  Kansas;  240  of  these  are  operated  by 
flour  mills,  136  are  farmers'  cooperative  organizations,  and  the  rest 
are  line  or  independent  companies.  One  milling  company  operating 
in  the  State  owns  101  elevators  located  throughout  the  grain  sections. 


1  Figures  obtained  from  secretary  of  the  Kansas  Orala  Dealers'  Association. 


10 


PRICES  OF   WHEAT   TO  PRODUCERS  IN    KANSAS,  ETC. 


The  local  mills  play  an  important  part  in  tho  buying  of  grain  at 
country  points.  Aside  from  purchasing  for  grinding  purposes,  the  mills 
engage  in  the  local  shipping  business,  in  competition  with  other  local 
buyers,  handling  this  business  in  the  same  way  as  the  local  elevators. 

Occasionally  the  mills  will  offer  a  premium  for  a  good  quality  of 
milling  wheat,  but  this  is  only  in  case  it  can  not  be  obtained  at  the 
local  market  price.  At  the  time  this  is  written,  in  some  sections  of 
the  §tate  the  farmers  are  holding  their  grain,  and  to  secure  w^heat  for 
milling  purposes  it  is  necessary  for  the  mill  to  offer  a  premium.  In 
one  case  this  was  as  high  as  3  cents  a  bushel  for  good  Turkey  wheat. 
Good  milling  Turkey  always  commands  a  premium  in  the  terminal 
market.  The  country  elevators  will  seldom  pay  a  premium  for  a 
superior  grade  of  wheat.  On  account  of  competition  between  coun- 
try elevators  there  is  a  tendency  on  the  part  of  many  to  overgrade  on 
ordinary  receipts.  Where  this  condition  exists  the  price  paid  the 
producer  will  be  lower  in  proportion  to  the  overgrading,  as  the  margin 
taken  out  by  the  country  elevator  must  of  necessity  be  large  enough 
to  take  care  of  operating  expenses. 

The  2^  to  4  cent  margin  taken  by  the  country  buyer  must  cover  the 
operating  expenses  of  the  elevator,  interest  on  investment,  and  any  net 
profit  that  is  made.  The  following  table  is  given  for  1 0  elevators  which 
operate  on  a  4-cent  margin,  showing  the  number  of  bushels  handled, 
shrinkage,  gross  receipts,  general  expenses,  and  net  profit  or  loss: 

Statement  of  10  country  elevators  operated  by  a  large  milling  company  in  Kansas,  June  SO, 

191S,  to  July  1,  1914. 


Bushels 

Bushels 

Total  gross 

Total 

Net. 

handled. 

shrinkage. 

profit. 

expense.' 

45,000 

170 

$1,630 

$830 

$799 

1,783 

472 

-305 

5 

-310 

25,000 

122 

1,700 

870 

835 

39,800 

868 

244 

798 

-554 

112,000 

1,500 

2,280 

959 

1,324 

65,600 

450 

1,630 

850 

775 

138,000 

2,000 

2,880 

1,540 

1,340 

23,600 

19 

1,249 

805 

444 

127,000 

1,300 

3,000 

1,225 

1,858 

60,000 

159 

8.53 

1,083 

-230 

'  This  only  includes  salaries,  fuel,  and  miscellaneous  expenses,  but  does  not  include  interest  on  the  invest- 
ment, insurance,  or  depreciation.  These  charges  must  be  taken  from  the  net  profit  shown  above  to  secure 
actual  net  profit. 

Summary  of  account  sales  of  10  representative  consignments  of  wheat  sold  on  Kansas  City 
Board  of  Trade,  July  27, 1914,  showing  sale  price,  costs,  and  net  to  shipper  per  bushel. 

[Market  quotation  July  27, 1914,  78  to  79  spot  ordinary.] 


Date. 


Shipped  from- 


Grade. 


Sale 
price. 


Freight 

per 
bushel. 


Commis- 
sion. 


Inciden- 
tal.! 


Net  to 
shipper. 


Jnly  27 
Do.... 
Do.... 
Do.... 
Do.... 
Do.... 
Do.... 
Do.... 
Do.... 
Do.... 


Spring  Hill.. 

Marietta 

Emmett 

Manhattan. . 

Lillis 

Holton 

Irving 

Vermillion.. 

Moray 

Valley  Falls. 


2  red 

3  hard... 
3  mixed. 
3  hard... 
...do.... 

..do.... 
..do.... 
..do.... 
3  mixed. 
3  hard... 


Cents. 

78 
78 
78 

m 

78 

78 

774 

78 

774 


Cents. 
3.00 
5.70 
4.80 
4.80 
4.80 
4.20 
4.80 
4.80 
3.60 
3.60 


Cents. 


Cents. 


Cents. 


76i 

71 

72 

72 

72i 

72J 

72 

71i 

73 

72i 


'  Inspection,  weighing,  interest. 


PRICES   OF   WHEAT    TO    PRODUCERS   IN    KANSAS,   ETC.  11 

As  the  volume  of  business  of  an  elevator  increases,  the  overhead 
charge  per  bushel  decreases.  The  large  elevator  which  does  a  yearly 
business  of  300,000  bushels  and  over,  if  well  managed,  can  often  con- 
duct its  business  on  a  margin  of  Ih  cents  per  bushel.  It  is  certain 
that  the  large  elevator  has  a  distinct  advantage  in  purchasing  over 
the  smaller  one  on  account  of  the  smaller  cost  per  bushel  for  over- 
head and  operating  expenses.  This  advantage  is  verj^  seldom  ex- 
ercised by  paying  a  higher  price  to  the  farmer.  The  large  elevators 
operate  on  practically  the  same  margin  as.  the  small  ones,  regard- 
less of  cost  of  operation.  This  has  its  merits  in  that  the  larger 
concern  does  not  offer  more  for  grain  than  the  small  ones,  thus 
putting  them  out  of  business  and  leaving  the  field  to  the  one  ele- 
vator, in  which  case  it  might  be  possible  to  control  to  an  extent 
the  price  paid  to  the  farmers  in  the  community. 

Hedging. — Of  the  16  country  elevators  visited  by  the  writers  not 
one  takes  advantage  of  the  hedging  of  purchases  and  consignments. 
If  grain  is  purchased  one  day  at  88,  and  before  the  same  is  sold  the 
market  drops,  the  country  elevator  sustains  a  loss  equivalent  to  the 
decline  of  the  market.  On  September  4  the  market  for  ''s])ots  ordi- 
nary" at  Kansas  City  was  1.12  to  1.13^.  The  market  had  reached 
this  point  after  a  gradual  rise.  A  great  many  country  elevator 
managers  expected  wheat  would  reach  a  price  better  than  the  Sep- 
tember 4  quotation  and  filled  their  elevators  with  grain  costing 
around  $1  a  bushel.  This  grain  was  not  protected  by  hedging  in 
the  future  market,  and  consequently  unless  the  price  returns  to  SI 
a  bushel  this  grain  will  have  to  be  sold  at  a  loss.  If  this  wheat  had 
been  hedged  there  would  have  been  no  loss  from  falling  prices  unless 
the  spread  between  cash  and  future  prices  should  vary.  In  fact,  this 
condition  ap})ears  to  be  prevalent,  and  not  one  of  the  16  elevators 
visited  hedges  its  holdings.  The  coimtry  elevator  managers  con- 
sider that  any  transaction  in  futures  constitutes  gambling,  they  hav- 
ing no  conception  of  the  insurance  value  of  future  trading.  This 
condition  is  entirely  different  from  that  found  in  the  spring  wheat 
section  (Minnesota  and  the  Dakotas),  where  even  the  smallest  ele- 
vator protects  its  purchases  by  hedging. 

This  is  the  weakest  point  in  the  present  method  oj  marketing  Kansas 
wheat. 

A  great  many  of  the  country  elevators  do  a  storage  business.  They 
do  not  sell  the  stored  grain  and  buy  futures  against  it,  but  hold  the 
identical  grain  in  the  elevators  until  the  farmer  decides  to  sell.  This 
fills  the  elevators  and  leads  to  congestion.  At  this  time  unless  the 
farmer  is  so  situated  that  he  can  hold  his  grain  on  the  farm  he 
must  sell  when  tlirashed.  This  situation  has  caused  the  building  of 
a  great  many  granaries  on  the  farm,  where  the  grain  can  be  kept 
until  market  conditions  are  such  that  the  farmer  thinks  it  best  to  sell. 

There  are  three  ways  in  wliich  the  country  elevator  may  dispose  of 
its  grain.  They  are  by  consignment,  selling  "to  arrive"  at  Kansas 
Gty,  the  Gulf,  or  other  points,  and  "on  track."  In  all  these  cases 
grain  is  shipped  subject  to  destination  weights  and  inspection. 

Consignment. — There  are  a  few  country  elevators  which  do  only  a 
consignment  business;  that  is,  ship  the  grain  to  some  commission 
firm  at  one  of  the  smaller  Kansas  markets  such  as  Wichita  or  Hutch- 
inson or  to  Kansas  City.  Occasionally  some  cars  are  consigned  to 
Cliicago,    Minneapolis,    and   Gulf   ])oints.     These   consignments    are 


12  PRICES  OF   WHEAT  TO   PRODUCERS  IN   KANSAS,  ETC. 

sold  by  a  commission  house  on  the  open  market  at  the  place  where 
shipped.  The  Kansas  City  Board  of  Trade  commission  is  1  cent  per 
bushel  on  consignments.  In  addition  to  this  there  are  the  fees  for 
inspection,  weighing,  and  freight,  and  where  consignments  are  made 
to  Kansas  City,  6  per  cent  interest  on  the  advance  made  by  the  com- 
mission house  to  tne  country  shipper  from  date  of  receipt  of  draft  to 
the  time  of  reimbursement  by  the  sale  of  the  car.  This  interest 
charge  is  provided  for  in  the  Kansas  City  Board  of  Trade  rules  and 
"must  not  be  less  than  6  per  cent  per  annum  on  any  sums  advanced 
on  such  consignments  or  purchases  to  time  of  reimbursement." 

The  following  is  taken  from  an  account  sales  of  a  car  of  wheat  con- 
signed by  a  country  elevator  to  a  commission  house  in  Kansas  City, 
Mo.,  showing  the  various  charges: 

1,437  bushels  10  pounds,  sold  at  $0.79 $1, 135.  3« 

Missouri  inspection $0.  65 

Weighing,  board  of  trade 50 

Weighing,  State 40 

Freight,  7  cents  per  hundredweight 60.  36 

Interest  on  advance  of  $990,  7  days,  at  6  per  cent 1.  16 

Commission  for  selling  at  1  cent  per  bushel 14.  37 

77.44 

Net  proceeds 1, 057.  92 

Net  per  bushel,  73.6  cents. 

A  great  many  managers  make  it  a  point  to  consign  on  a  rising 
market,  but  do  not  consign  when  the  market  is  declining.  By  con- 
signing when  the  market  is  rising  the  supposition  is  that  the  market 
will  have  reached  a  point  high  enough  to  allow  an  additional  profit 
over  the  "on  track"  price  by  the  time  the  grain  reaches  the  terminal. 
At  this  time  some  cars  are  being  consigned  to  Chicago  and  Kansas 
City  by  country  elevators  in  the  hope  that  the  market  will  advance 
in  the  next  few  days. 

The  big  part  of  the  consignment  business,  however,  is  done  bj 
the  country  elevators  regularly — that  is,  they  consign  the  grain  as 
fast  as  it  is  received  from  the  farmer.  The  elevators  which  do  this 
claim  that  the  advances  and  declines  of  the  market  during  the  time 
consigned  cars  are  en  route  will  practically  balance  for  a  year's 
business. 

To  arrive  Kansas  City  (basis  delivered  Kansas  City). — "To  arrive" 
bids  may  be  made  for  5,  10,  15,  or  any  number  of  days'  shipment. 
These  bids,  however,  generally  specify  delivery  within  the  shortest 
time.  The  "to  arrive'  bid  means  that  within  the  S])ecified  time  the 
bidder  will  accept  the  shipment  at  the  price  quoted,  freight  and  inci- 
dental charges  jiaid  by  the  country  shipper.  The  advantage  of  this 
method  is  that  the  country  elevator  manager  knows  what  he  is  getting 
at  the  time  of  shipment.  The  "to  arrive"  bids  from  Kansas  City  will 
vary  from  i  to  2  cents  under  the  spot  price  of  the  day  on  which  the 
bids  are  made.  This  difference  is  due  to  the  margin  of  protection 
which  must  be  had  aga-inst  fluctuations  in  the  market  from  the  time 
the  bid  is  sent  out  until  the  acceptance  is  received  and  a  hedge  can 
be  placed  against  the  purchase.  During  July,  owing  to  the  great 
amount  of  grain  being  delivered,  the  spot  price  changed  sometimes 
as  much  as  3  cents  in  one  day.     The  margin  between  the  spot  price 


PRICES  OF   WHEAT   TO   PRODUCERS  IN   KANSAS,  ETC. 


13 


and  the  "to  arrive'"  bids  are  greater  than  later  in  the  season  when 
the  market  is  steadier. 

Owing  to  the  condition  of  the  market  in  August  and  September, 
1914,  on  account  of  the  European  war,  very  few  Kansas  City  firms 
were  sending  out  '"to  arrive'  bids,  the  fluctuations  of  the  spot  price 
being  too  great  from  day  to  day  to  take  the  risk  of  having  the  spot 
price  fall  below  the  "to  arrive'   bid  made  the  day  before. 

The  following  shows  the  spot  prices  on  the  Kansas  City  Board  of 
Trade  and  the  "to  arrive"  bids  of  a  Kansas  City  buyer: 

Relation  of  the  Kansas  City  spot  price  with  "to  arrive"  bids  for  July — Spot  prices  August 

and  September. 


July, 

August, 

September. 

Day. 

Spots  (or- 
dinary).! 

To 
arrive.i 

Spots  (or- 
dinary). 

To 
arrive.' 

Spots  (or- 
dinary). 

To 
arrive.* 

1 

73  -73i 

74 
74i 

71i 

73 

73i 

78i 

1.03  -1.04 

1.04  -1.04J 
1.06  -1.07i 
1.12  -1.13i 
1.12  -1.12i 

3 

3 

74}-    75 

4 

6 

78i-    81 
80-85 
82i-    85 
87i-    88 

6 

74i 
751 
76 
76i 
76 
73i-74 

74i 
74i 
731 
72t 
72f 
72 

7 

8 

1.07  -1.09 

1.08 

l.Ooi 

1.03  -1.04 

1.02  -1.03 

9 

10 

90i-    92 
89-90 
87-88 
87 
85  -    85i 
83i-    84 

n 

12 

13 

72 
72 
73i 

73  -73i 

74  -74i 

74 

70} 

71 

71  i 

72} 

73} 

72} 

14 

96-97 

96  -    96i 

1.00  -1.02 

1.00  -l.OOi 

1.01  -l.OOi 
1.04  -1.05 

16 

16 

17 

81 i-    82i 
87-88 
91 i-    92i 
91i-    93 
92  -    93 
95  -    96 

18 

19 

20 

73i-74 
75 
7Si 

76  -77 
76i 
78i-79 

73} 
74i 
75i 
76i 
751 
77i 

31 

1.04  -1.04i 
1.02  -1.04 
1.02  -1.02i 
l.Oli-1.02 
99-1.00 
98 

32 

23 

34 

95  -    96 

96i-    97i 

1.00  -1.03 

1.03  -1.07 

1.00  -l.OOi 

99i-100 

25 

36 

37 

78  -79 
78i-81i 
82i-83 
87  -87} 
80-81 

77f 

28 

99 

1.00-1.01 

97J-    98 

29 

30 

31 

1.04 

1  This  is  the  spot  price  for  ordinary  No.  2  hard  (yellow  berry). 

•  Practically  no  bids  sent  out  owing  to  great  fluctuations  of  the  market. 

The  country  buyer  in  considering  the  different  "to-arrive"  bids, 
such  as  "to  arrive"  Galveston,  Kansas  City,  Chicago,  or  any  other 
point,  would  figure  out  the  costs  from  the  elevator  to  the  point  of 
dehvery  to  find  the  price  which  would  be  netted  at  the  elevator. 
Owing  to  the  difference  in  freight  rates  some  points  will  receive 
higher  bids  for  shipments  to  arrive  Gulf  ports  than  from  bids  to 
arrive  Kansas  City. 

The  following  is  a  copy  of  an  account  sales  of  a  car  of  wheat  pur- 
chased at  a  countr)^  point  "to  arrive"  Kansas  City.  This  shows  the 
charges  which  are  paid  by  the  country  shipper  on  a  "to-arrive"  sale. 
All  shipments  are  made  subject  to  destination  weights  and  inspection. 


14 


PRICES  OF   WHEAT   TO  PRODUCEES  IN   KANSAS,  ETC. 


Account  sales  (1)  car  wheat  bought  to  arrive  Kansas  City. 

1,842^  bushels,  $0.76^ |1, 409.  51 

Missouri  State  inspection $0.  65 

Board  of  trade  weighing 50 

Freight,  9^  cents  hundredweight 105. 02 

Interest  on  advance  of  $1,200,  six  days,  at  6  per  cent 1.  46 

107. 63 

Net  to  shipper 1,  301.  88 

Net  per  bushel,  70.65  cents. 

The  commission  rule  of  the  board  of  trade  at  Kansas  City  only 
includes  shipments  which  are  received  at  Kansas  City  and  does  not 
apply  to  shipments  to  other  markets  from  the  country,  which  are 
made  through  board  of  trade  members.  For  this  reason,  owing  to 
the  competition  in  securing  grain  in  the  country  for  shipments  to 
the  Gulf,  all  firms  have  done  away  with  the  interest  charge. 

The  following  are  copies  of  account  sales  of  two  cars  of  wheat  pur- 
chased in  the  country  by  a  Kansas  City  shipper  ''to  arrive"  New 
Orleans,  "to  arrive"  Galveston,  and  "to  arrive"  Chicago,  showing 
the  charges  paid  by  the  country  seller: 

Account  sales  car  wheat,  bought  "to  arrive"  New  Orleans,  from  a  country  elevator  in 
Kansas,  by  a  Kansas  City  shipping  firm,  June  24,  1914. 

1,457  bushels  20  pounds,  10.82 J $1, 198.  65 

Inspection  and  weighing $0.75 

Freight,  28  cents  hundredweight 244.  83 

245.58 

Net  proceeds 953.  07 

Accou  U  sales  car  wheat,  bought  "to  arrive"  Galveston,  from  a  country  elevator  in  Kansas 
by  a  Kansas  City  shipping  firm,  June  22,  1914. 

Galveston  delivered  1 ,073  bushels  20  pounds,  $0.  81f  gross $877. 45 

Freight,  26^  cents  hundred $170.  66 

Inspection .50 

Weighing ; .  .50 

171.66 

Net  proceeds 705.  79 

Net  per  bushel,  65f  cents. 

Summary  of  account  sales  of  4  cars  rvheat  bought  "to  arrive"  Chicago  from  a  country 
elevator  in  Kansas,  showing  prices  paid,  received,  freight  charges,  and  gross  profit  to 
shipper. 


Date. 

Where  purchased. 

Grade. 

Price 
paid  by 
shipper. 

Freight. 

Place 
sold. 

Date 
sold. 

Selling 
price. 

Gross 
profit. 

Sept.    3 

Clearwater 

2  hard. 
...do.. 

$1.00 
1.06 
1.06 
1.02 

Cents. 
14.7 
15.0 
15.0 
15.3 

Chicago. 

...do 

...do 

Sept.  4 
!!.'do.V. 

I  $1. 18 
1.22i 
1.22| 
1.19i 

Cts. 
per  bu. 
23.3 

Sept.    4 
Do.... 

Arlington 

li 

li 

2.2 

Geneseo 

Do.... 

...do 

...do... 

1  To  arrive. 

2  Sept.  4  market  advanced  over  the  Sept.  3  market,  which  made  the  gross  profit  on  this  car  considerably 
higher  than  the  average. 


PRICES  OF   WHEAT   TO   PRODUCERS  IX    KANSAS,  ETC.  15 

"On  track.'^ — The  most  common  way  for  the  country  buyer  to  dis- 
pose of  his  purchases  is  to  sell  "on  track."  The  "on  track"  bids 
are  for  cars  at  the  country  elevator  siding.  The  grain  shippers  base 
their  "on  track"  bids  on  the  "to  arrive"  prices  at  Kansas  City, 
Gulf  ports,  Chicago,  or  the  points  where  shipments  are  to  be  made. 
For  example,  a  shipper  sending  a  track  bid  to  a  Partridge,  Kans., 
elevator  will  take  the  "to  arnve"  prices  at  the  Gulf  or  other  points, 
subtract  the  freight  and  a  margin  to  cover  incidental  expenses  and 
profit. 

The  only  charges  to  the  country  elevator  man  on  a  car  sold  "on 
track"  would  be  the  weighing  and  inspection  at  destination;  and  in 
case  the  car  is  purchased  "on  track"  for  shipment  to  Kansas  City 
an  interest  charge  of  6  per  cent  on  the  draft  from  time  of  payment  to 
receipt  of  grain  at  Kansas  City.  There  is  no  interest  charge  when  cars 
are  bought  "on  track"  for  export  or  other  terminal  markets  aside 
from  Kansas  City. 

A  great  many  country  elevators  make  it  a  point  to  do  all  their 
selling  on  an  "on  track"  basis.  Where  sales  can  be  made  in  this 
way  as  fast  as  the  grain  is  received  from  the  farmer,  the  elevator 
assumes  very  little  risk  in  the  fluctuations  of  the  market. 

Conservative  elevator  managers  make  it  a  point  to  anticipate  some- 
what their  arrivals  and  sell  in  advance  "on  track"  the  expected 
deUveries  from  the  farmers  for  the  day. 

Account  sales  car  v:heat  bought  "on  track"  by  a  Kansas  City  shipper  at  MorrowvilU, 
Kans.,  and  shipped  to  Kansas  City,  Mo.,  Sept.  28,  1914- 

1,447  bushels  10  pounds,  $0.83^ $1,  208.  38 

Inspection $0.  65 

Board  of  trade  weighing 50 

Interest  on  $1,100  (draft),  10  days,  at  6  per  cent 1.  83 

2.98 

Gross  proceeds 1,  205.  40 

Net  per  bushel,  83.27  cents. 

Summary  of  account  sales  of  Jive  cars  purchased  in  country  by  shipper  and  sold  delivered 

Gulf 


Date  purchased  in  country. 


Price  paid 
country 
elevator. 


Freight 
to  Gulf. 


Total 
cost  at 
Gulf. 


Selling 
price 
Gulf. 


Profit. 


June  24,  1914.. 
June  23,  1914.. 

Do 

June  22,  1914.. 
Sept.  26,  1914. 


Cents. 

68i 
69i 
70 

Gulf  basis. 
90 


Cents. 
15 
15 
15 


16. 


Cents. 
83i 
84J 
85 
85 
106.8 


Cents. 
84i 
85i 
85i 
86{ 
108.5 


Cents. 

li 
.1 

4 

li 

»  1.7 


1  Sold  before  the  opening  of  the  market;  bought  after  the  close.    The  market  having  declined  allowed  a 
higher  profit  than  the  average. 

COUNTRY   ELEVATOR    FINANCING. 


Unlike  conditions  in  the  northwestern  grain  sections,  the  Kansas 
country  buyer  is  not  financed  by  the  commission  men.     In  the  north- 
western grain  sections,  country  elevators  by  agreeing  to  shij)  all  or  a 
arge  part  of  their  grain  to  one  commission  firm  can  draw  upon  an  open 


16 


PRICES  OF  WHEAT  TO  PRODUCERS  IN   KANSAS,  ETC. 


account  to  finance  their  country  purchasing.  This  is  a  risk  that  the 
commission  and  shipping  companies  operating  in  Kansas  have  not 
assumed.  No  advances  are  made  to  the  country  elevators  by  the 
shippers.  Drafts  with  bill  of  lading  attached  only  are  honored  by 
the  grain  merchants.  For  this  reason  the  country  elevators  are  free 
to  make  sales  whenever  and  to  whomever  they  deem  best.  Where 
the  country  elevator  operates  on  a  conservative  basis,  banks  in  most 
cases  will  loan  funds  sufficient  to  meet  the  needs  of  the  manager  in 
carrying  on  his  business.  Since  no  hedging  is  done,  unless  the  country 
elevator  manager  sells  his  grain  as  fast  as  it  is  received  from  the  farmer, 
the  chances  of  loss  are  so  great  that  local  banks  hesitate  to  finance 
country  elevators.  Money  up  to  a  reasonable  amount  on  stored 
grain  can  easily  be  obtained.  Several  thousand  dollars  in  clear  assets, 
however,  are  required  by  the  average  country  elevator  upon  which  to 
do  business,  as  all  grain  must  be  paid  for  upon  receipt,  and  the  differ- 
ence between  the  loan  value  and  the  price  paid  for  wheat  which  is  in 
the  elevator  awaiting  shipment  wUl  amount  to  about  30  cents  per 
bushel  or  S200  per  car  of  60,000  pounds  capacity,  taking  the  Septem- 
ber, 1914,  price  as  a  basis.  Several  elevator  managers  who  pur- 
chased wheat  at  $1  and  have  the  same  now  in  the  elevator  have  from 
10  to  15  cents  per  bushel  as  an  actual  loss  on  this  wheat  to  sustain 
imless  the  price  returns  to  $1  or  better. 

Margins  taken  by  country  elevators  at  nine  points  in  Kansas,  as  shown  by  purchases  from 
farmers  and  bids  "on  track"  for  Sept.  28,  1914. 


Amount 

Amount 

paid 
farmer  by 

paid 
country 

Elevator 

country 

elevator  by 

margm . 

elevator. 

shipper. 

Cents. 

Cents. 

Cents. 

84 

87 

3 

88 

91 

3 

86 

8Si 

2J 

86 

90 

4 

87 

90 

3 

90 

92 

2 

89 

92 

3 

87 

90 

3 

85 

89 

4 

CONTRACTS. 

Considerable  contracting  of  wheat  by  the  farmers  before  the  same 
is  harvested  is  done  throughout  Kansas.  Some  contracts  are  entered 
into  during  and  after  the  harvesting  season  for  future  deliveiy  to  the 
buyer.  A  few  local  elevators  make  such  contracts.  One  milling 
company  which  has  a  chain  of  100  elevators  scattered  throughout  the 
State  entered  into  a  gi'eat  many  of  these  contracts  during  June  and 
July  of  this  year.  As  these  contracts  were  made  around  a  basis  of 
65  cents  per  bushel,  considerable  difficulty  is  being  had  in  securing 
their  fulfillment  on  the  part  of  the  farmers.  As  a  result  this  line 
company  will  lose  a  great  many  thousand  dollars  this  year  from  this 
breach  of  contract. 

Competition  at  country  points  is  so  keen  that  it  is  very  seldom  that 
suit  will  be  filed  against  the  farmer  for  failing  to  deliver  his  wheat 


PRICES  OF  WHEAT   TO   PEODUCERS  IN   KANSAS^  ETC.  17 

as  agreed,  the  country  elevators  deeming  the  farmer's  business  of  such 
importance  that  they  do  not  care  to  lose  it.  In  some  cases,  however, 
suits  are  being  filed. 

A  few  cases  were  found  where  elevator  managers  during  the  early 
part  of  September,  believing  that  wheat  would  continue  to  advance, 
contracted  for  wheat  around  $1  a  bushel.  Now  that  the  price  is 
below  SI  all  those  contracts  are  being  fulfilled  on  the  part  of  the 
farmers  and  as  far  as  known  tlie  elevators  are  living  up  to  their  agree- 
ment and  are  accepting  the  wheat,  although  at  a  great  loss. 

THE    KANSAS    CITY    BOARD    OF    TRADE. 

Since  Kansas  City,  Mo.,  is  the  principal  primary  market  for  Kansas 
wheat,  its  organization  and  methods  play  an  important  part  in  the 
marketing  situation.  The  board  of  trade  is  limited  to  200  members, 
and  the  value  of  a  membership  is  about  S3, 000.  It  has  an  adequate 
trading  floor  with  the  usual  "pit,"  and  proper  facilities  for  telegraphic 
service  and  the  posting  of  quotations.  Samples  of  cash  wheat  are  dis- 
played in  wooden  trays  on  tables  provided  for  the  purpose.  The 
volume  of  future  trading  has  been  ijicreasing  during  recent  3^ears,  and 
although  the  members  do  much  of  their  hedging  in  Chicago  (espe- 
cially on  export  business)  there  is  a  fairly  active  and  continuous  trad- 
ing. The  rules  governing  disciplining  of  members,  arbitration,  etc., 
are  similar  to  those  in  other  produce  exchanges.  Wheat  is  the  most 
important  grain  handled,  although  corn  is  also  handled  in  large 
quantities.  The  receipts  for  the  various  kinds  of  grain  in  1913  were  as 
follows  ■} 

Bushels. 

Wheat 33,  870,  000 

Corn 91,  928,  750 

Kafir  corn 1,  793,  000 

Oats 10, 174,  500 

Rye 458,700 

Barley 364,  000 

Total 138,  588,  950 

The  most  important  classes  of  traders  operating  on  the  Kansas  City 
Board  of  Trade  are : 

1.  Cash  commission  men,  "to  arrive"  and  "track"  buyers. 

2.  Exporters. 

3.  Terminal  elevators. 

4.  Flom-  mills. 

5.  Future  brokers. 

6.  Sliippers. 

The  first  class  includes  those  firms  that  are  buying  wheat  in  the 
country  for  shipment  to  Kansas  City,  or  "delivered"  at  the  (rulf. 
The  methods  by  which  these  men  buy  have  been  described  in  the 
discussion  of  marketing  at  country  points.  There  are  some  firms 
which  specialize  on  the  straight-consigimrent  business;  others  who 
bu}^  on  a  "to  arrive"  basis  at  the  (lulf.  Closely  allied  to  the  com- 
mission men  are  the  future  brokers  who  execute  orders  to  buv  and 
sell  futures.  Many  houses  do  both  a  cash  grain  business  and  a  future 
brokerage  business.  Terminal  elevator  comj^anies  constitute  the 
most  important  class  of  wheat  buyers  on  the  floor  of  the  exchange. 

'  statistical  Report,  Kansas  City,  Mo.,  Board  of  Trade,  1913. 
11.  Doc.  1271,  63-3 2 


18  PEICES  OP   WHEAT  TO  PRODUCERS  IN   KANSAS^  ETC. 

The  terminal  elevators  are  operated  largely  by  the  large  exporting 
companies,  so  that  the  two  businesses  are  closely  allied.  Local  flour 
mills  keep  buyers  on  the  floor  to  buy  wheat.  By  "shippers"  is 
meant  those  who  specialize  in  the  purchase  of  grain,  either  on  the 
floor  or  in  the  country,  for  shipment  to  other  markets. 

An  interesting  feature  of  the  Kansas  City  Board  of  Trade  is  the 
rule  governing  "to-arrive"  bids.  On  the  Chicago  Board  of  Trade 
the  bids  that  could  be  sent  out  to  the  country  points  after  the  close 
of  the  market  were  determined  by  a  "call"  at  the  time  the  market 
closed.  At  one  time  Kansas  City  used  a  similar  method,  but  since 
the  litigation  in  Chicago  on  this  matter,  the  Kansas  City  board  has 
changed  its  method,  following  closely  the  method  now  used  in  Chicago. 
As  it  is  now,  "to-arrive"  bids  for  shipment  to  Kansas  City  are  made 
during  trading  hours  and  posted  on  the  bulletin  board,  and  it  is 
provided  that  all  bids  "shall  carry,  in  addition  to  all  other  charges 
described  by  the  rule  of  this  association,  a  charge  of  one-half  cent 
per  bushel  on  all  grain."  ^  Members  are  not  forced  to  make  their 
bids  to  the  country  after  trading  hours  in  accordance  with  the  final 
bids  posted  on  the  trading  floor,  but  may  make  whatever  bids  they 
desire,  provided  they  send  a  sealed  bid  to  the  secretary  of  the  board, 
and  give  notification  to  at  least  seven  other  firms  that  they  are  in 
the  market  for  grain  at  the  price  they  are  sending  out  to  country 
points.  Although  this  rule  appears  to  be  working  satisfactorily, 
it  has  been  in  force  for  such  a  short  time  that  it  is  impossible  to  pass 
judgment  on  it  at  present. 

The  terminal  elevator  situation  is  important.  Although  the  annual 
statistical  rerort  of  the  board  of  trade  for  1913  shows  37  elevators, 
with  a  combined  capacity  of  14,240,000  bushels,  many  of  the  houses 
are  small  private  houses  and  many  of  the  large  elevators  have  had 
important  additions  since  the  1913  figures  were  com}  iled.  At  present 
11  large  elevators  have  a  capacity  of  approximately  14,550,000 
bushels.  These  are  all  owned  by  railroads  that  enter  Kansas  City, 
and  formerly  they  were  operated  by  the  railroads  («>r  their  sub- 
sidiary companies)  at  very  low  storage  rates.  Complaints  on 
the  part  of  other  large  markets  on  the  ground  that  the  manner  in 
which  the  elevators  were  operated  gave  Kansas  City  a  preferential 
advantage  caused  an  investigation  by  the  Interstate  Commerce 
Commission.  As  a  result,  the  railroads  gave  up  the  operation  of  the 
elevators  (except  in  two  cases)  and  they  were  leased  to  private  grain 
companies  at  an  annual  rental  of  5  per  cent  on  an  appraised  valuation. 
This  arrangement  was  sanctioned  by  the  Interstate  Commerce  Com- 
mission. A  number  of  the  grain  firms  which  did  not  secure  elevators 
were  skeptical  about  this  arrangement,  but  acquiesced  with  the 
belief  that  one  of  the  largest  houses  (2,500,000  bushels)  and  two  of 
the  smaller  ones  were  to  continue  in  operation  by  the  railroads  owning 
them,  thus  insuring  ample  storage  space  for  their  business  without 
being  dependent  on  their  competitors,  whohad  leased  the  other  houses. 
Shortly  afterward,  however,  this  large  elevator  was  also  leased  to  a 
grain  company,  and  there  are  left  only  two  small  houses  that  are 
operated  by  the  railroads.  The  manager  of  one  of  these,  however, 
is  also  a  grain  dealer.  The  foUowhig  statement  indicates  the  present 
situation,  showing  the  name  of  each  elevator,  its  capacity,  the  name 
of  the  raih-oad  owning,  and  the  name  of  the  company  leasing. 

1  Rule  adopted  by  Kansas  City  Board  of  Trade,  Sept.  22,  1914. 


PRICES  or   WHEAT   TO   PRODUCEES  IIST   KANSAS,  ETC. 
Terminal  elevators  of  Kansas  City. 


19 


Name  of  elevator. 

Capacity 
(bushels). 

Name^^aUroad                            jjame  of  operator. 

A 

2, 500, 000 

COO, 000 

2,500,000 

1,150,000 

450, 000 

2, 000, 000 

1,500,000 

400, 000 

2, 500, 000 

(iOO,  000 

.350,000 

Santa  Fe 

Neola  Elevator  Co. 
.lohn  S.  Glovrr. 

Frisco 

Frisco 

Kansas-Missouri 

Cliicaso  Great  Western. 
Memphis     

Missouri  Pacific ,  Pacific  Elevator  Co. 

Great  Western Lonsdale  Grain  Co. 

Frisco 1  lirodnax  &  Mc  Linev. 

Milwaukee 

St.  Paul j  Simonds-Shirlds  Grain  Co. 

Burlinf^ton .\  vlsworth-Xcal-Tomlin  Grain  Co. 

B    .     "          

Santa  Fe 

Neola  Elevator  Co. 
Terminal  Ele  ator  Co. 

Rock  Island 

Kansas  City  Southern . . 
Wabash      

Kansas  City  Southern . 
Wabash 

Kansas  City  Southern  Elevator  Co. 
Missouri  Grain  Co. 

14,550,000 

The  last  two  named  in  the  list  are  the  only  ones  operated  by  the 
railroad  companies,  leaving  elevators  of  13,600,0{i0  bushels  capacity 
in  the  hands  of  eight  grain  companies.  The  Frisco  and  Mem])his  are 
comparatively  small  houses,  and  if  the  capacity  of  these  is  deducted 
from  above,  it  will  be  found  that  seven  elevators  with  a  combined 
capacity  of  12,550,000  bushels,  or  over  86  per  cent  of  the  total  avail- 
able capacity,  are  in  the  hands  of  six  firms.  The  Neola  Elevator  Co, 
is  a  subsidiary  of  the  Armour  Grain  Co.  of  Chicago;  and  the  Ter- 
minal Elevator  Co.,  of  the  Rosenbaum  Co.  of  Chicago.  Together, 
these  two  companies  control  5,400,000  bushels  of  the  elevator  capacity 
of  Kansas  City. 

The  control  of  the  elevator  situation  by  a  few  powerful  companies 
is  not  an  unusual  one  in  the  large  wheat  markets  of  the  United 
States,  and  it  is  a  question  whether  it  is  the  ideal  condition  for  the 
grain  trade  at  large.  In  Kansas  City  it  undoubtedly  gives  the 
operators  of  tlie  terminals  an  advantage  over  the  small  dealer,  but 
it  may  be  agreed  that  thev  are  entitled  to  an  advantage  because  of 
the  expense,  risk,  and  skill  involved  in  operating  a  large  elevator. 
On  the  other  hand,  this  situation  tends  to  render  the  more  powerful 
companies  still  more  powerful  as  compared  with  the  smaller  com- 
petitors, to  concentrate  the  grain  business  into  fewer  hands,  and  to 
thus  narrow^  the  market  by  reducing  the  number  of  active  buyers. 
The  representatives  of  a  number  of  firms  which  formerly  were  actively 
engaged  in  buying  grain  in  the  country  for  shipment  to  Kansas  City 
claimed  that  they  have  had  to  largely  discontinue  this  business, 
and  to  specialize  more  on  a  straight  consignment  business,  owing 
to  the  change  in  the  elevator  situation. 

INSPECTION    AND    GRADING. 

Although  the  State  of  Kansas  has  laws  governing  the  inspection  and 
gracUng  of  grain,  and  maintains  an  inspection  department  for  ])er- 
forming  this  service,  very  little  of  the  grain  originating  in  Kansas  is 
sold  on  Kansas  inspection.  This  is  because*,  tliere  is  no  im])ortant 
primary  market  in  tlie  State.  The  bulk  of  the  wheat  is  graded  either 
at  Kansas  City,  Mo.,  or,  during  years  wdien  the  export  movement  is 
heavy,  at  Gulf  ports.  At  Galveston -insjK'Ctioii  is  ])erformed  by  the 
Galveston  Cotton  ICxchange,  and  at  New^  Orleans  by  the  Now  Orleans 
Board  of  Trade.     The  charge  at  each  point  is  50  ccMits  a  car. 

For  grain  arriving  in  Kansas  City,  Mo.,  the  State  of  ^fissouri  has 
an  inspection  department  which  performs  this  service.     This  (U>part- 


20 


PKICES  OF   WHEAT   TO  PRODUCERS  IN   KANSAS,  ETC. 


ment  has  no  jurisdiction  over  cars  arriving  in  yards  on  the  Kansas 
side  where  formerly  the  Kansas  inspection  department  attended  to 
the  grading.  The  State  of  Kansas  sought  to  make  inspection  in 
Kansas  City,  Kans.,  compulsory,  but  owing  to  dissatisfaction  with 
Kansas  grades,  both  on  the  part  of  Kansas  shippers  and  terminal 
grain  dealers,  the  Board  of  Trade  of  Kansas  City,  Mo.,  fought  the 
legality  of  the  compulsory  inspection  in  Kansas,  resulting  in  a  tlecision 
of  the  Kansas  Supreme  Court  to  the  effect  that  such  inspection  should 
not  be  compulsory.^  The  Board  of  Trade  of  Kansas  City,  Mo.,  then 
established  a  sampUng  and  inspection  department  to  take  samples 
from  cars  arriving  on  the  Kansas  side,  for  inspection  and  grading  on 
the  Missouri  side. 

At  present  there  are  therefore  two  separate  inspection  departments 
grading  grain  that  arrives  at  Kansas  City,  the  Missouri  State  depart- 
ment and  that  of  the  board  of  trad?.  The  fee  in  both  cases  is  50 
cents  a  car.  Usually  there  is  no  dupUcation  in  the  service,  but  when 
cars  have  been  sampled  by  the  board  of  trade  on  the  Kansas  side 
and  these  cars  then  pass  to  the  Missouri  side  for  unloading  at  public 
elevators,  there  are  two  inspections  with  a  double  fee.  Fortunately 
the  Missouri  and  board  oi  trade  departments  work  in  complete 
harmony,  and  where  double  inspection  occurs  there  is  seldom  any 
difference  in  the  grades  except  in  some  cases  where  cars  are  heavily 
loaded,  rendering  the  obtaining  of  satisfactory  samples  difficult. 
Missouri  still  has  "car-door  inspection,"  whereas  the  board  of  trade 
has  the  more  modern  system  of  ''office  inspection." 

Although  the  Kansas  State  inspection  department  plays  no  part  in 
grading  at  Kansas  City  or  at  Gulf  ports,  there  is  a  certain  amount 
graded  at  interior  Kansas  points,  some  of  which  finds  its  wa}^  to 
outside  markets  where  destination  inspections  govern.  The  follow- 
ing statement  gives  a  number  of  specific  carloads  of  wheat  that  were 
inspected  both  at  Wichita,  Kans.,  and  Galveston,  Tex. : 

Variation  of  grading  by  Kansas  State  at  Wichita,  and  Galveston  Cotton  Exchange  at 
Galveston,  as  shown  by  21  cars  shipped  from  Wichita  to  Galveston. 


Car  No. 


Shipping  station  in 
Kansas. 


Galveston  grade.    [Kansas  State  grade. 


25228  A.  T.... 
16765  A.  T.... 
10081  U.  P.  R. 

36984  R.  I 

31803  R.  I 

41520  R.I 

31414  R.  I 

65099  R.I 

580349  P  

35497  R.  I 

54552  R.  I 

41178  R.  I 

53094  R.I 

50951  R.  I 

35401  R.  I 

103221  A.  T... 
26427  A.  T.... 
18728  A.  T.... 

22777  A.  T 

26718  A.  T.... 
44545  A.  T.... 


Pretty  Prairie. 

Clency 

Forg 

Mullen  worth.. 


Preston 

Mullen  worth. 

Bucklin 

Jerka 

Pratt 

Partridge 

Gerlinger 


Ford. 


Preston. . 
Tinker . . . 
Gar  ford.. 
Belmont . 
Pratt 


Shard 
Shard 
2  hard 

do 

2  hard 

2  hard 
Shard 

3  hard 
Shard 

3  hard 
2  hard 
Shard 
2  hard 

do 

Shard 
2  hard 
Shard 
2  hard 

4  hard 
Shard 
2  hard 


58  test 2  hard, 

57  test I  Shard, 

59  test 2  hard, 

;  Shard, 

60  test !  2  hard, 

59  test 1  3  hard, 

58  test I  Do. 

56  test 3  hard, 

57  test 2  hard, 

59  test Do. 

59  test Shard, 

59  test 

59  test Shard, 

2  hard, 

58  test !  2  hard, 

60  test Do. 

57  test 4  hard, 

60  test 2  hard, 

.58  test 4  hard, 

58  test i  Shard, 

59  test 3  hard. 


59  test. 

58  test. 

59  test. 

58  test. 

59  test. 

58  test. 

56  test. 

59  test. 

58  test. 

58i  test. 
59i  test. 

59  test. 

55  test. 
59J  test. 

57  test. 
57  test. 
59  test. 


Note. — It  is  apparent  that  the  whole  situation  with  regard  to  inspection  and  grading  is  of  vital  interest 
In  connection  with  the  problem  of  Federal  inspection  or  supervision.  There  is  a  decided  sentiment  both 
in  Kansas  and  Kansas  City,  Mo.,  in  favor  of  Federal  inspection. 


1  Opinion  No.  17598.    The  State  of  Kansas  f.  Atchison,  Topeka  &  Santa  Fe  Railroad. 


PRICES   OF    WHEAT   TO   PRODUCERS   IN    KANSAS,   ETC. 


21 


KANSAS    CITY    WEIGHTS. 

The  weighing  of  carloads  of  wheat  as  they  enter  Kansas  City  is 
primarily  in  the  hands  of  the  weighing  dejnirtment  of  the  Kansas 
City  Board  of  Trade.  There  is  also  a  Missouri  State  weighing  de])art- 
ment  which  weighs  grain  entering  five  large  elevators,  which  are  jnib- 
lic  elevators  under  Missouri  law.  The  ^lissouri  State  fee  is  40  cents 
into  and  35  cents  out  of  an  elevator.  The  board  of  trade  charge 
is  50  cents  into  and  15  cents  out  for  the  im>)ortant  elevators.  On 
grain  entering  these  elevators  there  is  a  double  charge,  each  de])art- 
ment  levying  its  fee.  The  supervision  of  weights  is  ])ractically  in 
the  hands  of  the  board  of  trade  weigliing  department,  wliich  has 
ample  facilities  for  the  testing  of  scales  and  power  to  enforce  owners 
to  keep  their  elevators  in  ])ro]ier  condition.  There  are  51  emi)loyees 
in  this  de])artment,  and  a  sufHcient  number  of  men  are  stationed 
at  each  elevator  to  properh^  take  care  of  the  weighing.  There 
are  130  hopper  scales  and  22  track  scales  under  the  supervision  of  the 
de|)artment. 

The  following  statement  shows  the  Missouri  State  inspection  and 
weighing  fees: 

Cents. 

Inspection  fee,  per  car,  in  railroad  yards 50 

Sample'furnished.  per  car 15 

Moisture  test,  including  sample,  per  car 25 

"  In  "  inspection  at  elevator,  if  not  inspected  in  ^Missouri  yards,  per  car 50 

"Out "  inspection  at  elevator,  per  car 50 

"  In  "  weighing,  per  car 40 

"Out"  weighing,  per  car 25 

"Transfers,"  not  inspected  in  Missouri  yards,  per  car 50 

"In"  weighing  fee  only  on  "transfers,"  per  car 50 

Moisture  tests  on  "transfers"  "in"  and  "out,"  on  charge 25 

Moisture  test  on  "out"  cars,  per  car 25 

Fees  charged  by  the  board  of  trade  weighing  department  on  grain 
unloaded  and  loaded  in  carload  lots  are  as  follows: 


Empire 

Kelley  Mills 

Zenith 

Dixie  Mill 

R.  E.  Kidder  Mill 

Southern 

Frisco 

Memphis 

Atchison,  Topeka  &  Santa  Fe 

"B" 

Elevator  "A" 

Rock  Island 

Chicago  Great  Western 

Kansas-Missouri 

Atlas  Oats 

Kansas  t'ity  Southern 

WaRK'oner-Gates 

Southwestern  Mill 

Rosedale 

Fowler,  A.  &  B 


In. 

Out. 

$0. 50 

SO.  25   i 

.50 

.25 

.50 

.25   ! 

.50 

.25 

..50 

.25 

.50 

.25 

.50 

.15 

.50 

.15 

.50 

.15 

.50 

.15 

.50 

.15 

.50 

.15 

.50 

.15    ! 

.50 

.25    ] 

.50 

.15    , 

..50 

.2.5    j 

.50 

.25 

.50 

.25 

1.00 

.50 

Acme  Elevator 

Kornfalfa 

BulteMill 

Kansas  i  itv  Seed  and  Grain. 

Weston's  Warehouse 

Ransom's  Warehouse 

Milwaukee 

L.  C.  Worth  Commission  Co. 

Globe 

Murrav 

Terminal 

Wabash 

Shilling's  Warehouse 

Kus-soll  Elevator 

Murphy,  ( '.  and  F 

Kemper  Mills 

Olive  Street  Elevator 

Ismert-Hinol-e  -Mill 

Solomon  Valley  Warehou.se.. 


SO.  50 
1.00 
.50 
1.00 
1.00 
1.00 
.50 
1.00 
.50 
.50 
.50 
.50 
1.00 
1.00 
2.00 
.50 
1.00 
.50 
1.00 


Out. 


SO.  25 
.25 
.25 
.25 
.25 
.25 
.15 
.25 
.25 
.15 
.15 
.25 
.25 
.25 
.25 
.25 
.25 
.25 
.50 


Weighing  and  counting  out  sacked  commodities  (even  weight). 

Counting  out  sacked  commodities 

Weighing  and  counting  in  commodities 

Weighing  and  counting  in  commodities  (even  weight) 

Weighing  hav 


$0.75 

.25 

1.00 

1.50 

I.  00 


22 


PRICES  OP   WHEAT   TO  PRODUCEKS  IN    KANSAS,  ETC. 


Number  of  cars  of  each  grade  of  wheat  sold  in  Kansas  City,  Mo.,  during  the  5-day  periods 
ending  on  about  July  3,  Aug.  3,  and  Sept.  3,  1913  and  1914. 

[Compibd  from  the  Kansas  City  Price  Current  by  the  Bureau  of  Crop  Estimates.] 


Grade. 

Total  sales,  15 
days. 

1913 

1914 

No.  1  hard 

Cars. 

4 

637 

13.-) 

62 

17 

Cars. 
1 

No.  2  hard 

827 

No.  3  hard 

1,180 

No.  4  hard  

307 

33 

45 

16 

9 

1 

21 

30 

10 

6 

No.  2  red    

185 
48 
21 
29 

310 

No.  3  red 

119 

49 

Sample  red       

23 

2 

2 

No.  3  white  spring 

3 

5 

2 

1 

Wholesale  prices  of  wheat,  in  cents  per  bushel,  at  Kansas  City,  Mo. 

(Compiled  from  the  Kansas  City  Price  Current.    Each  price  in  the  table  is  an  average  of  the  actual  sales 
of  that  grade,  quotations  for  individual  sales  being  "weighted"  according  to  the  quantities  sold.] 


Date. 

No.  1 
hard. 

No.  2 
hard. 

No.  3 
hard. 

No.  4 
hard. 

Sample 
hard. 

No.  1 
mixed. 

No.  2 
mixed. 

No.  3 
mixed. 

No.  4 
mixed. 

Sample 
mixed. 

1913. 
June  20     

87.6 
86.2 
85.1 
84.7 
85.3 

82.2 
82.4 
82.8 
84.1 
82.7 

83.4 
83.8 
84.1 
84.1 
85.6 

76.0 
75.5 
7S.7 
77.9 
77.9 

87.7 
81.2 
78.9 

75.8 
79.4 

102.6 
106.2 
105.0 
105.5 
108.2 

86.0 
85.4 
84.1 
82.8 
83.0 

81.8 
82.4 
82.1 
84.2 
82.4 

84.2 
84.3 
84.0 
84.0 
86.7 

72.5 
82.0 

83.6 
82.2 
82.2 

'"'82.'4' 

81.6 
82.0 
81.6 
82.8 
81.1 

82.9 
83.0 
83.0 
81.0 
83.8 

72.0 

84.0 
84.5 
80.0 
76.0 
80.0 

June  30 

83.2 

82.0 

July    1 

July    2 

83.0 

82.3 
82.5 

80.0 
80.0 
81.2 

80.0 
81.5 

81.5 
81.5 

July    3           

July  30                ... 

81.0 
81.0 
82.2 
83.0 

July  31         

81.5 

83.0 

Aug    2 

78.5 

82.5 

Aug  29 

84.5 
82.5 
83.3 
86.8 
86.2 

72.8 
72.2 
74.8 
74.0 
74.3 

88.0 

82.5 

80.2 
80.2 
80.3 
83.5 

90.0 
66.5 

Sept.  2 

""'82.2' 
86.0 

82.2 
82.2 

79.0 

Sept.  3       

Sept.  4 

1914. 

July     1 

July    2 

75.2 
80.0 

86.6 
78.4 
75.7 
72.8 
76.4 

100.5 
104.1 
103.3 
104.0 
106.9 

78.5 
73.6 

86.7 
77.5 
74.0 
71.0 
76.0 

94.0 
102.8 
103.0 
10?.  5 
108.2 

July    3 

July  30 

84.8 
77.0 
73.3 
69.8 
73.5 

97.3 

101.4 
101.5 
101.7 
104.0 

81.2 

78.0 

July   31           .  .       . 

70.0 

Aug     3 

75.0 

71.5 

95.6 
98.0 
94.5 
99.8 
101.8 

73.8 

96.5 
101.0 
101.5 
101.0 

70.0 

Aug.  29 

101.5 
105.0 
105.0 

96.0 

Aug.  31 

105.0 

96.0 

Sept.    1 

100.0 

Sept    2 

100.0 

Sept    3 

107.5 

PRICES  OF   WHEAT   TO  PEODUCERS  IN   KANSAS,  ETC.  23 

Wholesale  prices  of  wheat,  in  cents  per  bushel,  at  Kansas  City,  Mo. — Continued. 


Date. 

No.  1 
red. 

No.  2 
red. 

No.  3 
red. 

No.  4 
red. 

Sample    No.  1 
red.     durum. 

No.  2 
durum. 

No.  3 
durum. 

No.  2 
white 
spring. 

No.  3 
white 
spring. 

No.  4 
white 
spring. 

1913. 
June  20 

85.1 
83.6 
83.5 
82.9 
83.5 

81.5 
81.7 

84.0 
81.3 
80.5 
81.3 
81.9 

80.2 
80.6 

80.0 

81.8 
81.5 
80.0 

July     1 



1 

July     2 

78.3  '       81.4 

July     3 

79.5 
80.1 

78.2 

"'so.'s' 

82.0 
81.0 
83.0 
83.0 
84.0 

71.2 
70.0 
71.0 
72.5 

81.3 

78.1 
78.0 



July  30 

78.0 

July  31 

78.0 

Aug     2 

83.9 
83.7 

87.1 
87.4 
87.5 
87.5 
89.5 

72.5 
72.0 
72.6 
73.9 

si.  5 

82.2 
85.5 

"'88.'6' 

71.9 
71.3 
72.1 
73.0 

79.0 
78.2 

78.5 

1 

79.0 

1 

Aug    29 

81.0 

Aug.  30 

1 

Sept.    2     .. 

85.0 
85.0 

80.0 

Sent.   3    ... 

80.0 
81.0 

Sept.    4 

79.0 

1914. 
June  29 

70.5 

June  30 

72.0 

70.0 

July     1 

July     2 

July     3 

67.0 

July  30    ... 

88.2 
81.5 
79.8 
74.9 

77.7 

103.8 
107.0 
106.8 
106. 2 
109.0 

87.0 
80.5 
77.8 
73.0 
76.3 

102.4 
105.7 
104.5 
104.9 
106.5 

86.0 

82.7 

July  31 

79.5 

73.0 
69.2 
73.4 

99.0 
103.5 
102.0 
103.0 
106.6 

69.2 

Aug.    3    . 

67.7 

Aug.  29 

Aug.  31    ... 

98.0 

104.0 

100.0 

Sept.    1 

Sept.    2 

100.0 
107.0 

Sept.    3 

104.0 

105.0 

Note.— From  these  prices  must  be  subtracted  the  freight  rate,  shippers'  profit,  and  other  incidental 
chx"!?es,  and  the  margin  taken  out  by  the  country  elevator,  to  determine  the  price  which  is  paid  the 
farmer. 

Account  sales,  shipment  of  15,000  bushels  of  vjheat  purchased  by  shipper  at  Kansas  City 
and  sold  delivered  at  Philadelphia,  Sept.  25,  1914. 


Grade. 

A-o-t.           1  P£- p- 

Cost  of  grain 
Kansas  City. 

No  2  hard 

3,333  bushels  20  pounds $1.00 

3,050  bushels 1             .97 

$3,333.33 

No.  3  hard 

2, 958. 50 

Do 

3,366  bushels  40  pounds ,             .98 

2,950  bu.shels '             .97* 

3, 299. 33 

Do 

2,876.25 

Do 

2,300  bushels i             .  96i 

2,219.50 

1 

Total  cost  of  grain  at  Kansas  City $14.  686.  91 

Freight  to  Philadelphia  on  15,000  bushels,  at  15.6  cents 2,  340.  00 

Office  and  overhead  expense,   estimated,   \  cent;  mixing,  ^  cent;  ex- 
change, ^  cent.    Total  miscellaneous  expense,  yu  cent  per  bushel 105.  00 

Total  cost  of  grain  to  shipper  delivered  at  Philadelphia 17, 131.  91 

15,000  bushels  sold  at  1.14^  delivered  Philadelphia 17, 175.  00 


Net  profit. 


HOW    THE    EXPORT    BUSINESS    IS    HANDLED. 


43.09 


The  export  business  in  Kansas  wheat  is  handled  principally  by 
Kansas  City  and  Chicago  houses,  although  a  large  quantity  is  also 
handled  by  eastern  (principally  New  York)  houses.     In  general  there 

•  Small  net  profit  due  to  rise  in  market  before  grain  to  fill  order  had  been  purchased. 


24  PEICES  OP   WHEAT   TO   PRODUCERS  IN    KANSAS,  ETC. 

arc  three  classes  of  dealers  wlio  are  engaged  in  the  movement  of  wheat 
from  Kansas  stations  to  foreign  ])orts.  The  first  includes  those  who 
carry  it  only  to  the  Gulf  (Galveston,  Port  Arthur,  or  New  Orleans). 
The  second  includes  those  who  take  it  at  the  Gulf  and  sell  itckdivered 
in  foreign  countries.  This  class  is  repr(>sented  ]:)rincipally  by  New 
York  exporters.  The  third  consists  of  those  who  buy  wheat  in  the 
countiy  for  delivery  at  the  Gulf  or  on  the  Kansas  City  Board  of 
Trade,  and  sell  it  on  terms  which  call  for  delivery  at  foreign  ])orts. 
This  third  class  also  buys  some  wheat  "delivered"  at  the  Gulf  or 
f.  o.  b.  vessel. 

There  are  many  small  firms  that  buy  wheat  in  the  country  for 
delivery  at  Gulf  ports.  These  are  located  not  only  in  Kansas  City 
but  also  at  such  points  as  Wichita  and  Hutchinson.  "Delivered  at 
the  Gulf"  means  merely  "on  track"  at  a  Gulf  port,  and  the  charges 
up  to  this  point  consist  of  the  freight  rate  from  the  country  station 
and  weighing  and  inspection  fees  on  arrival  at  the  Gulf.  To  load 
wheat  from  the  car  into  the  hold  of  a  vessel,  it  must  be  taken  into  an 
elevator  and  often  stored  until  loading  time.  There  is  then  a  loading 
charge  of  three-fourths  of  a  cent  and  other  incidental  expenses, 
amounting  to  a  total  of  from  1  to  H  cents.  To  undertake  these  last- 
named  operations  is  termed  "fobbing,"  which  means  placing  the 
wheat  f.  o.  b.  vessel.  Most  of  the  smaller  houses  who  buy  from  the 
country  "delivered  Gulf"  sell  theii  grain  "on  track"  to  the  larger 
expoiters  and  do  no  "fobbing,"  while  some  undertake  this  function 
and  sell  to  the  larger  firms  f.  o.  b.  steamer. 

During  the  "fobbing"  operation  grain  is  mixed  in  the  Gulf  elevators 
and  the  smaller  firms  often  employ  a  forwarding  agent  at  the  Gulf 
port  to  attend  to  this  matter,  while  the  larger  houses  maintain  men 
at  the  Gulf  ports  to  look  after  this  mixing. 

The  large  houses  which  buy  direct  from  country  points  and  carry 
the  grain  through  to  foreign  ports  necessarily  do  their  own  "fob- 
bing," which  they  must  take  into  consideration  in  the  price  they 
charge  the  foreign  buyer. 

Practically  all  grain  sold  to  foreign  importers  is  sold  on  a  basis  of 
delivery  at  foreign  port.  That  is,  an  exporting  house  must  charge 
the  Liverpool  buyer  a  high  enough  price  to  allow  him  to  pay  the  ocean 
freight,  insurance,  and  other  incidental  charges,  and  have  something 
left  for  profit.  When  an  exporter  sells  in  this  way,  he  is  said  to  sell 
"c.  i.  f.,"  i.  e.,  cost,  insurance,  and  freight  included.  When  a  shipper 
sells  to  an  exporter  either  "delivered"  or  f.  o.  b.,  he  usually  has  to 
pay  a  brokerage  of  one-eighth  of  a  cent  to  a  broker  who  has  consum- 
mated the  sale  for  him. 

It  occasionally  happens  that  a  Kansas  City  house  places  such  a 
sale  through  a  New  York  broker  only  to  find  that  he  has  sold  it  to 
another  Kansas  City  house,  which  is  selling  the  grain  "c.  i.  f." 

There  are  great  risks  incurred  by  those  houses  that  sell  c.  i.  f.  In 
the  first  place,  a  Kansas  City  house,  for  example,  has  a  certain  amount 
of  grain  at  the  Gulf  which  it  wishes  to  sell  to  a  Liverpool  importer. 
This  grain  is  necessarily  hedged  in  the  future  market.  An  offer  is 
cabled  the  Liverpool  house.  The  Liverpool  market  is  in  operation 
while  it  is  night  in  Kansas  City.  The  next  morning  the  Liverpool 
house  wires  an  acceptance.  The  Kansas  City  house  must  buy  in  its 
hedge.  If  the  market  is  "off"  at  the  opening,  the  Kansas  City  house 
may  make  more  than  it  anticipated.  But  the  Liverpool  house  knows 
more  [about  world  market  conditions  than  the  American  exporter 


PEICES   OF  WHEAT   TO   PEODUCEES  IX   KANSAS,  ETC. 


25 


during  the  night,  and  is  in  a  better  position  to  know  what  effect  the 
"cables"  will  have  on  the  opening  of  the  American  market.  The 
Kansas  City  house  must  allow  for  this  possible  fluctuation  in  the 
future  market  when  he  makes  h.is  offer. 

Another  risk  connected  with  the  export  business  is  the  fluctuation 
of  ocean  freight  rates  as  well  as  the  difficulty  of  alwa^'s  having  enough 
ocean  space  contracted  for  or  being  able  to  use  all  that  is  contracted 
for.  Ocean  freights  are  not  so  stable  as  railroad  rates.  If  tliere  is 
a  dearth  of  vessels  at  a  given  port,  the  rate  goes  up;  if  there  are  a 
number  of  vessels  that  can't  get  full  cargoes,  tlie  rate  is  cut. 

A  third  risk  is  in  the  fluctuation  of  the  price  of  foreign  exchange. 
The  exporter  sells  in  terms  of  English  money  delivered  at  Liverpool. 
If  the  ]:rice  of  foreign  exchange  varies  between  the  time  of  sale  and 
the  selling  of  the  bill  of  exchange,  the  exporter  has  either  an  unfore- 
seen loss  or  gain. 

In  spite  of  tliese  risks  and  the  fact  that  the  export  business  requires 
the  tying  up  of  a  large  amount  of  capital,  the  business  is  done  on 
astonishingly  smaU  margins.  The  gross  margin  allowed  by  the  ex- 
porter in  making  his  bids  usually  runs  from  2^  to  3  cents.  Out  of 
this  must  be  paid  the  overhead  expenses  of  the  firm,  such  as  office 
expenses,  cablcCTams,  interest,  etc.,  amounting  in  all  to  about  1  cent 
a  bushel,  and  leaving  a  net  profit  of  from  1|  to  2  cents  a  bushel. 
Sometimes  this  net  profit  is  attained;  sometimes  it  is  greater;  some- 
times it  is  smaller.  The  following  statement  shows  in  detail  eight 
actual  transactions  of  a  large  exporting  house  during  July,  1914, 
before  the  European  war  began.  In  each  case  the  wheat  was  bought 
"delivered"  at  Gulf,  and  sold  "delivered"  Liverpool,  and  the  ex- 
penses were  the  f .  o.  b.  charges  at  Gulf  port,  ocean  freight,  and  insur- 
ance and  incidental  charges.  The  f.  o.  b.  charge  of  1  cent  is  figured 
low,  and  most  exporters  consider  it  to  be  from  1|  to  1^  cents.  It 
is  impossible  to  figure  it  exactly,  because  it  involves  some  interest 
charges.  The  insurance  and  incidental  charges  are  al^o  figured  lower 
than  most  houses,  and  include  only  marine  insurance,  wliereas  all 
shipments  to  the  Continent  and  some  to  the  L'nited  Kingdom  carry 
an  additional  "msurance  on  outturn,"  meaning  an  insurance  which 
guarantees  or  protects  the  delivery  of  the  full  amount  that  the  ^Vmer- 
jcan  exjiorter  contracts  to  deliver  at  the  wluirf  in  the  foreign  port. 

Detailed  statement  of  eight  specific  transactions  of  wheat  bought  '^delivered  Gulf"  and 
sold  "delivered  Liverpool." 


a 

2 

Costs. 

g 

> 

• 

B 

"O 

"3 

0  » 

0  «.> 

*^  a 

<D 

03 
O 

.2" 

>  o 

11 

.5 

i 

9 

i 

Si 
a 

IS  C 
0  Oi 

a,  §      <S  ft 

a  x      So 

1 

•3 

o 

JS 

a 

4 
1 

3  a 

■3  9 

IS 

a 
■3 

^ 

9 
u 

i 

t 

0. 

C3 

2 

o 

3 

t4 

"C 

0 

u 

5 

0 

u 

ft       ftft 

fi 

o 

1^ 

n 

P4 

PL, 

Eh 

0 

p=; 

H 

0 

<       < 

1914. 

Cents. 

Cents. 

Cents. 

Cts. 

Cts. 

CU. 

CU. 

CU. 

CU.    as. 

1.. 

July  9. . . 

No.  2  hard. 

July.. 

40,000 

92.75 

83.00 

9.75 

6.0 

0.5 

1.00 

7.5 

>2i     1.00  !      u 

2.. 

July  11.. 

do.... 

...do.. 

40,000 

92.60 

81.75 

in.  95 

6.0 

0.5 

1.00 

7.5 

3i     1.00  1      2 

3.. 

July  13.. 

do.... 

...do.. 

40,000 

91.60 

.801 

10.75 

6.0 

0.5 

1.00 

7.5 

3?      1.00  '      2 

4.. 

July  14.. 

do.... 

...do.. 

40,000 

90.85 

.801 

10.00 

6.0 

0.5 

1.00 

7.5 

2J     1.00         1 

5.. 

JiUy21.. 

do.... 

Sept.. 

24,000 

94.65 

.841 
.84| 

10.00 

7.5 

0.5 

1.00 

9.0 

1        1.00         0 

6.. 

...do.... 

do.... 

Oct... 

24,000 

95.10 

10.50 

7.5 

0.5 

1.00 

9.0  : 

11  j  1.00       -i 

7.. 

July  15. . 

do 

July.. 

40,000 

91.65 

81.50 

10.15 

6.0 

0.5 

1.00  , 

7.5 

2.65     1.00     1.65 

8.. 

July  25.. 

do.... 

Oct... 

24,000 

98.70 

88.50 

10.20 

7.5 

0.5 

1.00  1  9.0  j 

1.20     1.00  1  0.20 

>  Subtracting  total  costs  from  total  marein. 

451641 


26  PEICES  OP   WHEAT  TO   PRODUCEES  IN   KANSAS^  ETC. 

The  following  statement  gives  in  detail  an  actual  transaction  of 
another  exporting  house  in  which  8,000  bushels  of  wheat  were  bought 
"on  track,"  or  "delivered"  New  Orleans,  and  sold  to  an  importer  in 
Rotterdam  on  July  7,  1914: 

Cents 

per 

bushel. 

Selling  price,  delivered  Rotterdam,  at 96J 

Price  paid  "on  track "  New  Orleans 84 

Gross  difference 12J 

Items  of  cost: 

F.  o.  b.  expense If 

Brokerage  for  making  sale | 

Marine  insurance | 

Insurance  on  outturn f 

Brokerage  to  Rotterdam  broker  (J  per  cent) | 

Ocean  freight 8 

Total  costs 11 

Gross  profit  to  exporter IJ 

Out  of  this  gross  margin  the  exporter  must  pay  his  office  and  other 
overhead  expenses.  In  this  case  it  will  be  noticed  that  two  broker- 
ages were  paid,  one  to  a  New  York  broker  for  making  the  sale  and 
one  to  a  Rotterdam  broker  for  attending  to  the  transaction  at  that 
port.  There  is  also  an  insurance  charge  on  outturn,  which,  as  ex- 
plained above,  insures  the  delivery  of  the  full  8,000  bushels. 

The  following  statement  shows  a  transaction  in  which  a  dealer 
bought  16,000  bushels  of  grain  delivered  Galveston,  and  sold  f.  o.  b. 
vessel  on  the  same  day  (July  9,  1914)  to  another  exporter  who  sold 
the  grain  c.  i.  f.  foreign  port: 

Cents. 

per 

bushel. 

Price  sold  to  exporter,  f.  o.  b.  vessel 85| 

Price  paid  "  delivered  "  Galveston 83j 

Gross  difference 2^ 

F.  0.  b.  expenses: 

Loading f 

Inspecting  and  weighing i 

Brokerage | 

Total  expenses IJ 

Gross  profit 1 

It  will  be  seen  from  the  foregoing  cases  that  the  profits  per  bushel 
on  the  export  business  are  extremely  small — as  small,  in  fact,  as  those 
of  domestic  shippers,  although  the  latter  do  not  perform  as  much 
service  or  run  as  great  risks  as  the  former.  But  export  wheat  is 
handled  in  large  lots,  and  the  profit  on  an  individual  transaction  may 
be  a  large  one.  A  half-cent  clear  profit  on  a  sale  of  40,000  bushels 
means  a  total  net  profit  of  $200  on  the  transaction.  But  a  fiuctua- 
tion  in  a  single  one  of  the  elements  of  risk  enumerated  above,  which 
has  an  effect  of  as  httle  as  one-half  a  cent  a  bushel,  either  wipes  out 
the  profit  entirely  or  yields  a  profit  of  $400  instead  of  $200. 


PRICES   OF   WHEAT   TO  PEODUCEES  IN   KANSAS,  ETC.  27 

It  is  a  question  whether  another  business  involving  equivalent  risks 
and  capital  investment  can  be  found  where  the  difference  between 
profit  and  loss  hangs  on  such  slight  fluctuations  in  the  prices  of  the 
various  factors  involved. 

Summarized  statement  showing  the  spread  between  the  price  received  by  a  farmer  in  southern 
Kansas  on  Sept.  28,  1914,  and  the  price  received  by  an  exporter  for  wheat  to  be  delivered 
at  Liverpool,  together  with  the  various  elements  of  marketing  costs. 

Cents  per 
bushel. 

Price  received  by  farmer  in  Kansas 87.  0 

Margin  taken  by  country  elevator 3.  0 

Price  paid  country  elevator  by  shipper 90.  0 

Freight  rate  point  in  Kansas  to  Galveston 15.  0 

Inspection  and  weigliing  at  Galveston 25 

Gross  profit  of  shipper 1.  25 

Price  paid  by  exporter  at  Galveston 106.  50 

Cost  of  elevation,  loading  into  boat,  etc 1.  25 

Freight,  Galveston  to  Liverpool 6.  0 

Insurance,  etc.,  in  transit 75 

Overhead  expenses  of  exporter 1.  0 

Net  profit  of  exporter 1.  25 

Price  delivered  at  Liverpool 116.  75 

Summarized  statement  of  approximate  spread  between  Kansas  farm  price  and  price  delivered 
at  Philadelphia  on  Kansas  City  terms,  Sept.  SO,  1914. 

Cents  per 
bushel. 

Price  received  by  farmer  in  Kansas 87.  0 

Margin  taken  by  country  elevator 3.  0 

Freight  rate  to  Kansas  City 6.2 

Inspection,  weighing,  and  interest  on  draft 25 

Commission 1.  0 

Price  paid  by  shipper  in  Kansas  City 97.  45 

Freight  rate,  Kansas  City  to  Philadelphia 15.  6 

Mixing  in  Kansas  City  elevator 25 

Exchange 20 

Overhead  expense  of  shipper 375 

Net  profit  of  shipper 625 

Price  delivered  in  Philadelphia 114.  500 

SUMMARY. 

1.  The  State  of  Kansas  is  fortunately  situated  for  marketing  its 
wheat  in  that  it  has  a  great  number  of  domestic  outlets  and  the  for- 
eign market  via  Gulf  ports.  This  situation  leads  to  vigorous  compe- 
tition between  grain  dealers  of  the  various  terminal  markets  for 
Kansas  wheat. 

2.  The  prices  ot  wheat  paid  to  farmers  in  Kansas  are  based 
largely  upon  the  prices  in  Kansas  City,  Mo.,  and  at  the  Gulf 
ports  for  export.  From  these  basic  ]>rices  must  be  subtracted 
the  freight  rate,  shi])pcr"s  j)rofit,  anil  other  incidental  charges 
and  the  margin  taken  out  by  the  country  elevator  to  determine  the 
price  which  is  paid  to  tiie  farmer.  Since  the  margins  of  j)rofit  taken 
by  the  grain  dealers  in  the  larger  markets  are  vovy  small  (averaging 


28 


PRICES  OF   WHEAT  TO  PRODUCERS  IN    KANSAS,  ETC. 


♦1.16-3/4  price  In  Llreripool. 


1.15  gross  profit  of  o/porter. 
.75  insurance,    etc. 

6.00  freight,  Oulveeton  to 

Liverpool. 

1.25  f.o.b.   coutfe. 

1.25  profit  of  shipper. 

1.05  Inspection,   etc. .Galveston. 


15.00  freight,   Kunsas  poSnt  to 
GalvestOB. 


3.00  count J7  elevator  groao 
profit. 


67.00  received  by  Kansas  faraer. 


Fig.  2. — Diagram  showing  the  relation  between 
the  price  received  by  the  farmer  in  Kansas  and 
the  price  paid  the  exporter  for  a  bushel  of 
wheat  to  be  delivered  in  Liverpool,  with  the 
various  costs  per  bushel  of  marketing  from  the 
time  the  grain  is  delivered  to  the  country  eleva- 
tor by  the  farmer  until  it  reaches  Liverpool. 


about  1  cent  a  bushel),  it  appears 
that  the  farmers  of  Kansas,  as  a 
genei  al  rule,  are  obtaining  all  their 
wheat  is  worth. 

3.  The  weakest  link  in  the  chain 
of  marketing  Kansas  wheat  is  the 
country  elevator.  Compared  with 
the  value  and  difficulty  of  serv- 
ice rendered,  the  margin  taken 
by  the  country  elevator  is  per- 
haps larger  than  that  taken  by 
any  other  middleman  in  the 
maiketing  of  wheat.  One  spe- 
cial weakness  is  in  the  failure 
to  use  the  future  market  to 
hedge  holdings.  Elevators  fre- 
quently become  congested  with 
unhedged  stored  grain.  The  ele- 
vators, as  a  general  rule,  are 
operated  inefficiently,  with  inad- 
equate accounting  systems  and 
lack  a  sufficient  working  capital. 

4.  In  conspicuous  contrast  with 
the  country  elevatoi  situation  is 
the  great  efficiency  and  highly 
organized  method  of  operation  of 
the  terminal  grain  operators  and 
the  exporteis.  In  the  case  of 
the  export  trade  especially  the 
profits  per  bushel  are  extremely 
low  considering  the  service  ren- 
dered and  the  capital  and  risk 
involved. 

5.  No  evidence  was  discov- 
ered of  collusion  between  large 
interests  to  restrain  competition 
or  to  depress  prices  in  Kansas 
City.  In  Kansas  City  86  per 
cent  of  the  terminal-elevator 
capacity  is  controlled  by  six 
firms,  i3ut  these  firms  appear 
to  be  in  competition  with  each 
other. 

6.  The  cost  of  transportation 
is  by  far  the  largest  element 
in  the  cost  of  marketing  wheat. 
Of  the  total  difference  between 
the  farm  price  and  the  Kansas 
City  price,  freight  accounts  for 
approximately  65  per  cent.  Of 
the  spread  between  the  farm 
price  and  the  Liverpool  price, 
railroad  and  ocean  freights  ac- 
count for  approximately  70  per 
cent. 


o 


UNIVERSITY  OF  CALIFORNIA,  LOS  ANGELES 

THE  UNIVERSITY  LIBRARY 

This  book  is  DUE  on  the  last  date  stamped  below 


Form  L-0 
2.JI/1-2, '43(0205) 


AT 

LOS  ANGJraLES 

UBRARY 


HD 

9049   U.S. Bureau  of 

W43U5  markets. 

1914   Prices  of  wheal 

to  producers 

in  Kansas J  etc. 


UCLA^Young   Research   Library 

HD9049.W43   U5   1914 
y 


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LIBRARY  SUPPLIES 

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